Hong Kong is working hard to supervise the cryptocurrency market acceptably so that technologies like Web3 can reach their full potential.
Despite the current industry crisis brought on by the FTX crash, the Hong Kong government is still committed to building up the infrastructure for cryptocurrencies.
In 2023, the local government and authorities are willing to work with entrepreneurs in the crypto and fintech space, according to Hong Kong’s finance secretary Paul Chan.
“Virtual assets have experienced a price decline in the last year, according to Julia Leung, CEO of the Securities and Futures Commission (SFC), who spoke at the Asian Financial Forum in Hong Kong.
“The good thing is that it concentrates investors’ and sellers’ thoughts on investor protection when the froth is taken out of the system as platforms, and certain coins failed.”
The Hong Kong government places a high priority on protecting investors and, in recent years, has taken steps to protect ordinary traders from the dangers of cryptocurrency fraud and NFT fraud.
The SFC of Hong Kong declared in 2017 that non-fungible tokens (NFTs) exposed investors to “heightened risks.” The SFC stated that investors “should be conscious of these risks and should not invest in NFTs” if they cannot comprehend them and absorb the possible losses fully.
To reduce risks for retail investors, Hong Kong has been cracking down on retail traders recently and declaring that only seasoned professional traders would be permitted to trade cryptocurrency in its territories.
Chan noted that several business organisations desired to increase their operations in Hong Kong. During the occasion, Chen is said to have discussed many pilot projects being conducted by Hong Kong officials and the government to assess the potential advantages of virtual assets and consider related uses.
According to him, one of the initiatives involves the Hong Kong government issuing tokenised green bonds for institutional investors to buy.
Hong Kong has gradually reiterated its support for cryptocurrencies over the last year, positioning itself to surpass all other countries in the space by 2022.
In the middle of December, Hong Kong launched its first two exchange-traded funds (ETF) for bitcoin futures. Before coming public, they collected more than $70 million.
The president of the Securities and Futures Commission in Hong Kong declared in October, just before the event, that Hong Kong is prepared to separate its approach to regulating cryptocurrencies from the Chinese crypto prohibition that would go into force in 2021.
The government is working in tandem with financial authorities to provide a favourable environment to promote the sustainable and responsible growth of the VA sector in Hong Kong.
Sam Bankman-Fried, the CEO of cryptocurrency exchange FTX and a well-known supporter in the sector, termed Hong Kong’s actions today “very encouraging.” But added that if only the area had adopted this position last year, about the forceful exodus that Hong Kong’s last proposal triggered.
In a tweet, he stated, “I truly enjoy when officials interact constructively and enthusiastically with the people that matter the most for the development of an industry: the consumers.”