Hong Kong government shifts its views on virtual assets

Key Takeaways:

  • The government of Hong Kong is planning to introduce retail investors to trade cryptocurrencies and exchange-traded funds.
  • The Current regime is open to future reviews of the legal aspects of smart contracts and property rights for tokenized assets.

 The government of Hong Kong released a statement outlining its policy for the growth of virtual assets (VA) in Hong Kong. The section summarises the Government’s strategy and policy position concerning creating a thriving VA industry and environment in Hong Kong.

To foster a favorable environment for the ethical and sustainable growth of Hong Kong’s virtual asset industry, the current regime is collaborating with financial regulators. Given the innovative models and constantly changing nature of virtual assets, the authorities strive to work with legal and regulatory frameworks to create a more conducive environment.

According to the statement, Hong Kong is “ready to engage” with and welcome foreign virtual asset service providers to the city. As part of suggested changes to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the Legislative Council of Hong Kong, a Special Administrative Region of the People’s Republic of China, is actively investigating Hong Kong’s new VASP licensing system. The administration will go into effect on March 1 of the following year.

According to a statement made at the start of FinTech Week on Monday, “We will implement quick and efficient  crash constraints to alleviate actual and foreseeable risks in accordance with international standards so that virtual asset advancements can thrive in Hong Kong in a sustainable manner.”

The government wants to be clear about its policy position in order to show its commitment to exploring fintech with the international virtual asset community.

Additionally, the government will look into the legality of smart contracts, which are “self-executing” transactions whose outcomes rely heavily on pre-programmed input variables, and evaluate property rights for tokenized assets.

Hong Kong is willing to consider the possibility of having Exchange Traded Funds (ETFs) on VA in the market, and the Securities and Futures Commission will be undertaking a public consultation on how retail investors may be given an appropriate degree of access to VA.

Recently, Dubai’s Virtual Asset Regulatory Authority granted tentative approval for virtual assets to leading cryptocurrency investment platform Q9 Capital, which has its headquarters in Hong Kong (VARA). 

In order to test the technological advantages VA offers and their potential uses in the capital markets, the government and regulatory bodies are also looking into a handful of pilot projects. These initiatives include issuing non-fungible tokens (NFTs) for the Hong Kong Fintech Week in 2022, tokenization of green bonds, and e-HKD.

Industry insiders predicted that these actions would open the door for real estate security token offerings (STOs). With this initiative, Hong Kong is attempting to regain its status as a fintech gateway.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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