Hong Kong is reported to be planning the legalization of retail cryptocurrency trading in what shapes as a significant move away from mainland China’s strict anti-crypto stance.
According to Bloomberg, Hong Kong authorities are looking to establish a mandatory licensing program for crypto platforms which would allow retail trading, possibly as early as March 2023.
If made reality, such a platform would represent the city’s second major shift away from mainland China policies in the space of a few months after Hong Kong removed its mandatory hotel requirement for international arrivals in late September.
Bloomberg said that Hong Kong regulators are looking to allow the listing of prominent tokens although they will refrain from endorsing specific coins like Bitcoin. The move, it added, is part of government initiatives to restore the city’s reputation as a global financial hub – a reputation battered by the COVID-19 pandemic and the riots of 2019.
However, experts have also questioned whether Hong Kong can win back the trust of the crypto sector after previously restricting platforms to dealing with clients whose portfolios were worth at least US$1 million – essentially fencing out consumer-facing business.
Since then, Hong Kong has fallen down the global crypto pecking order with its overall global ranking for crypto adoption falling from 39 in 2021 to 46 in 2022, as per blockchain specialist Chainalysis Inc.
But Michael Lee, Executive President of digital-asset specialist HashKey Group, told Bloomberg the city has been actively looking to expand its crypto regime.
“Just trading digital assets on its own is not the goal,” Lee said. “The goal is really to grow the ecosystem.”
Hong Kong’s positioning appears in sharp contrast to mainland China, whose central bank last year reiterated a nationwide ban on cryptocurrencies by confirming that all transactions involving digital currencies, including mining and trading, are illegal.
According to a memo posted on the corporate website of the People’s Bank of China (PBOC) in September 2021, “virtual currency-related business activities are illegal financial activities,” and “should not and cannot be used as currency in the market or circulated.”
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