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The crypto market is kind of chaotic right now. But that hasn't stopped Hong Kong from having aims in the cryptosphere.
In late October, Hong Kong went public with its plan to become a major Asian crypto hub. The idea was to create a market with legal retail trading and digital-asset exchange-traded funds. It was working on creating some sort of virtual-asset licensing system and inviting global crypto exchanges to explore opportunities in the city. Hong Kong has long been a financial center, so this plan was a way to boost that reputation post-COVID when brain drain and lockdowns challenged its financial hub reputation.
Then, in November, FTX totally collapsed, triggering a meltdown in the crypto scene.
Still, Hong Kong is keeping up its crypto goals.
"As certain crypto exchanges collapsed one after another, Hong Kong became a quality standing point for digital asset corporates," said Paul Chan, Hong Kong's financial secretary since 2017, at a Web3 forum. Chan added that Hong Kong is still going to push regulations to match "international norms and standards."
Right now, crypto regulation is managed by a few different government sectors in Hong Kong. The Hong Kong Monetary Authority looks at stablecoins, and the Securities and Futures Commission (SFC) enforces regulations. And Financial Services and the Treasury of Hong Kong (FSTB) places crypto within financial regulation, starting the conversation on allowing retail investment in crypto, which was previously a no-go.
Now, the SFC has said it will propose a shortlist of crypto tokens to be used for retail trading. CEO Julia Leung explained: "Virtual assets have in the past year gone from peak to low levels. The good thing is that when the froth is taken out from the system as platforms and some tokens collapsed, it focuses investors and sellers' minds on investor protection."
The SFC will also start accepting applications for visual asset service provider (VSAP) licenses in 2024. All trading platforms and exchanges need a license, otherwise, they'd face fines and/or jail terms.
Now, it looks like many technology companies and tech start-ups are flocking to Hong Kong, looking to set up headquarters there.