The government of Hong Kong restricts crypto exchanges for retail trading. Cryptocurrency exchanges operating in Hong Kong will have to be licensed by the city’s market regulator. Exchanges can only provide services to professional investors, according to proposals from the government.
Since last year Hong Kong’s Financial Services and Treasury Bureau (FSTB) has been consulting the market on changes to those rules.
Dozens of cryptocurrency exchanges operate in Hong Kong, which includes some of the world’s largest. The city currently has an “optin” approach under which exchange can apply for a license to market watchdog SEC.
On Friday, The FSTB said all cryptocurrency exchanges wished to operate in Hong Kong have to get license. It additionally said, “confirming the service of a VA exchange to professional investors is appropriate at least for the initial stage of the licensing regime.”
Local financial technology and crypto industry associations have opposed regulation stopping exchanges from offering services to retail investors. According to Hong Kong law, an individual must have a portfolio of HK$8 million to count as professional investors.
The FSTB said it intends to propose legislative changes to turn its proposals into law in the upcoming 2021-2022 session.
Governments and financial regulators around the world are still assessing whether and how they should regulate the cryptocurrency industry. Their main concerns are Investor protection and preventing money laundering.
Under Singapore’s regime, crypto exchanges have to get licenses but can have retail investors as clients. However, China recently announced a ban on banks and payment companies offering crypto-related services. It leads to a selloff wiping $1 trillion from crypto market capitalization.
