Asia is currently one of the most regulated continents on the planet in terms of cryptocurrency laws. Hong Kong is the latest Asian nation that is set to tighten cryptocurrency laws on traders and exchanges. The Hong Kong Securities and Exchanges Commission (SFC) is looking to tighten the current cryptocurrency laws as concerns over crypto-crime and money laundering heighten across Southeast Asia. Hong Kong’s current stance on cryptocurrency is one of the least stringent in the region, which is a stark contrast to the more hard-line approach taken by mainland China.
As Hong Kong is one of the world’s leading financial epicenters, the SFC is set to reevaluate cryptocurrency laws, especially in terms of regulating the Initial Coin Offering (ICO) sector. Crypto-related commercial activities in China are pretty much banned, so some people might think that this move is long overdue. According to the SFC, if an investment fund has 10% or more of digital assets they will now need to obtain a license. And even then the companies will only be able to sell their products to professional investors.
The SFC want to set up a voluntary scheme where exchanges will be able to test their digital assets in what is being deemed a “temporary regulatory sandbox” and will then be able to decide whether they need to seek a license. The Hong Kong SFC have been warning the industry for many months about their plans to impose tighter cryptocurrency laws. Earlier this year in February, the SFC warned seven cryptocurrency exchanges in the wake of complaints made by investors.
It is hardly surprising that Hong Kong is looking to tighten cryptocurrency laws as many major economies across the world are currently reevaluating their stance on crypto regulations.
There are many pros and cons in tighter regulatory measures on the Hong Kong crypto industry. Although many consider it essential to safeguard investors and keep a lid on the industry, others believe that the new cryptocurrency laws could be costly and work against crypto firms in Hong Kong.
Cryptocurrency Alliance President Casey Botticello believes increased regulation may adversely affect Hong Kong when saying:
“The cost of regulations will be extraordinarily high. The requirements of the SFC initiative may prove too burdensome for some operators.”
The price of wider crypto adoption will always be high, but that is the price we pay sometimes to ensure the industry and investors are protected. Will the tightening of cryptocurrency laws in Hong Kong be a good or bad thing for the local industry? Only time will tell.