Hong Kong to Bar Retail Access to Cryptocurrencies
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The Hong Kong government is seeking to restrict cryptocurrency access to wealthier investors amid an ongoing global crackdown by regulators.
Cryptocurrency exchanges operating in Hong Kong will have to licensed by the Securities and Futures Commission (SFC) and limit access to professional investors – defined as individuals with a portfolio of HK$8 million ($1.03 million) – according to government proposals published on Friday.
Hong Kong’s Financial Servies and Treasury Bureau (FSTB) said it had been consulting the market on the changes since last year and intends to advance its proposals into law in the upcoming 2021-22 session of the city’s legislative assembly.
The FSTB continues to advance the regulatory changes despite concerns by local players that the restriction against retail access could drive exchange abroad and investors to unregulated channels.
According to the FSTB, confining the services of a [virtual asset] exchange to professional investors is appropriate at least for the initial stage of the licensing regime.
Hong Kong authorities’ move to tighten on crypto coincides with similar regulatory efforts elsewhere including China’s crackdown on mining and trading as well as U.S. tax proposals to report cryptocurrency transferal of over $10,000.
Questions & Answers
Q.What is the new minimum portfolio value to be considered a professional investor in Hong Kong?
What is the new minimum portfolio value to be considered a professional investor in Hong Kong?
To be defined as a professional investor, an individual must possess a portfolio worth HK$8 million, which is equivalent to $1.03 million. This new threshold will restrict access to cryptocurrency exchanges for other investors.
Q.Which government bodies are responsible for these proposed cryptocurrency regulations in Hong Kong?
Which government bodies are responsible for these proposed cryptocurrency regulations in Hong Kong?
The Securities and Futures Commission (SFC) will license cryptocurrency exchanges under these new proposals. The Financial Services and Treasury Bureau (FSTB) published the proposals and consulted the market on the changes.
Q.When does the Hong Kong government plan to make these new cryptocurrency proposals into law?
When does the Hong Kong government plan to make these new cryptocurrency proposals into law?
The government intends to advance its proposals into law during the upcoming 2021-22 session of the city’s legislative assembly. They have been consulting the market on these changes since last year.
Q.Are there any concerns about these new regulations from local industry players?
Are there any concerns about these new regulations from local industry players?
Yes, local players are concerned that restricting retail access could drive exchanges abroad and push investors towards unregulated channels. However, the FSTB is still advancing the regulatory changes.
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