Hong Kong to adopt a friendly crypto regulatory framework in June 2023

The Secretary for Financial Services and the Treasury in Hong Kong, Christian Hui, has revealed that over 80 crypto companies want to expand their operations to Hong Kong. These firms are seeking the appropriate license to commence their operations in the region.

Crypto firms want to establish branches in Hong Kong

Hong Kong is a Special Administrative Region in China. However, the region shows a more favourable stance towards digital assets than mainland China. Mainland China banned cryptocurrencies in 2021, which forced many companies operating in the country to move their operations offshore.

Hong Kong started showing interest in cryptocurrencies in 2022. In October, Hong Kong released an update regarding the regulatory framework for digital assets. In the statement, Hong Kong revealed that it wanted to regulate crypto companies like it did traditional finance companies.

Since this report was published, digital asset companies started showing interest in setting up their operations in Hong Kong. Out of the 80 companies mentioned by Hui, 23 have already started working on creating a robust local presence. These companies include cryptocurrency exchanges, blockchain infrastructure firms, and firms offering security services in the cryptocurrency industry.

“As of end-February 2023, Invest Hong Kong has received expressions of interest from over 80 virtual asset-related Mainland and foreign companies in establishing their presence in Hong Kong,” Hui said. “These companies included VA exchanges, blockchain infrastructure companies, blockchain network security companies, virtual currency wallets, and payment companies, as well as other projects on building the Web3 ecosystem.”

Hong Kong crypto regulations to be established in June 2023

The crypto regulatory framework, whose creation is currently underway, will create a licensing regime for virtual asset service providers. The regulatory framework is slated to come into effect in June 2023. Given the interest the Hong Kong market is receiving from crypto firms, this regulatory framework could see Hong Kong emerged as a global crypto hub.

According to Hui, the crypto regulatory framework would be comprehensive and clear. The regulator also anticipates that more virtual asset businesses could set up businesses in Hong Kong or seek regional development opportunities. The interest can already be seen in the firms looking to apply for regulatory licenses.

Hui noted that the Hong Kong Monetary Authority was also working on a regulatory framework for stablecoins. These regulations will be effected in 2024. Hong Kong is also planning to approve crypto-backed exchange-traded funds (ETFs) for retail investors

Hong Kong is also showing interest in the Web3 sector. The region has set aside $50 million from its current budget to develop Web3. The funds will also go towards building a virtual assets world in the region and holding discussions related to the sector.

Hui added that the government would work towards creating a favorable regulatory framework for Web3. He added that the companies that wanted to set up base in the region needed to use their expertise and grow Hong Kong’s crypto operations.