Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Friday, Mar 29, 2024

Hong Kong’s New Criteria on Crypto Exchanges Actually Isn't Important

Hong Kong’s New Criteria on Crypto Exchanges Actually Isn't Important

Hong Kong rolls out a new framework for crypto exchanges, which could establish an important precedent for the local market.

On Nov. 7, Ashley Alder, the CEO of the Securities and Futures Commission of Hong Kong, said at a conference that a new framework for crypto exchanges will be implemented. Almost immediately after the announcement, Reuters reported that a crypto exchange based in Hong Kong called OSL became the first to apply for a license with the SFC.

While the introduction of a license for crypto exchanges by the government of Hong Kong is widely viewed as positive reinforcement for the growth of the crypto sector in Asia, some view it as a redundant solution that fails to facilitate the needs of local exchanges.


Why is it redundant?

In a conversation with Cointelegraph, George Harrap, the co-founder and CEO of Bitspark, a company based in Hong Kong that allows crypto-to-cash trades, said that the framework is not applicable to the majority of exchanges that operate within the region.

Simply put, because the framework restricts the scope of the license to companies that facilitate security token trades and serve institutional investors, it does not provide additional regulatory clarity to local companies. Harrap noted that this will not apply to any existing Hong Kong-based exchanges:

Most exchanges based in Hong Kong that provide support to local users and investors in mainland China through over-the-counter trading are focused on offering liquidity for major cryptocurrencies like Bitcoin (BTC) and Ether (ETH) rather than regulated security tokens.

As such, the framework released by the SFC, in its current form, is not necessarily relevant to major exchanges that operate in Hong Kong. “So as I can see, this is not useful and nobody except perhaps lawyers and consultants were asking for this,” Harrap added.


The positive side of the crypto exchange license

Although the SFC’s criteria for crypto exchanges has seen mixed reactions from the local community, several exchange executives consider it to be an overall positive factor for growth over the long term.

Jason Lau, the chief operating officer at OKCoin and head of business development at OKGroup, said that having an option to be regulated -regardless of the scope of the regulation -is a big step for the industry.

Dovey Wan, a founding partner at Primitive Crypto, said that the framework could positively affect local exchanges serving mainland Chinese investors like Huobi, adding that it is “big” for the sector.

Despite being an important crypto exchange market in the aftermath of the imposition of a ban by the People’s Bank of China on trading of cryptocurrencies, Hong Kong has lacked clear guidelines for exchanges for years. It can be argued that based on the structure of the license criteria, guidelines in Hong Kong still remain ambiguous for local companies.

However, firms anticipate that it could become a stepping stone toward the introduction of a more practical and comprehensive regulatory framework for trading platforms in the future.


Will it really affect exchanges serving mainland investors?

In Hong Kong, many mainland investors are said to be trading cryptocurrencies in Hong Kong through Tether (USDT), a stablecoin whose value is pegged one-to-one with the U.S. dollar. Often, traders purchase Tether to invest in major cryptocurrencies and convert Tether to the Hong Kong dollar to sell their cryptocurrency holdings for fiat, as reported by SCMP.

Previously, Terence Tsang, the CEO of Hong Kong- and Taiwan-based cryptocurrency exchange TideBit, said that the scrutiny from the Chinese government was targeted at local exchanges in China claiming to be based outside of the country, not at companies that are already based outside of the nation.

Since exchanges in Hong Kong that have been facilitating trades for mainland investors have operated without significant roadblocks throughout the past two years, and given that the scope of the SFC’s framework is not inclusive of major cryptocurrencies, Harrap told Cointelegraph that the license criteria is unlikely to have any impact, adding that:


Stricter oversight is expected

Regardless of the direction the SFC may be heading with its newly released criteria for exchanges, Hong Kong is moving toward tightening its oversight over the local cryptocurrency market.

In December 2018, the SFC directly contacted cryptocurrency exchanges rumored to have had troubles with processing deposits and withdrawals for users, and requested several initial coin offerings to shut down.

The SFC’s warning against cryptocurrencies late last year was primarily targeted at ICOs, but it emphasized that it will look over exchanges operating in the local market. Even at the time, Timothy Loh, a Hong Kong-based lawyer, said that the requirements set forth by the SFC could be burdensome for local companies.

Hence, even though the general sentiment around the approach of the SFC remains positive among local executives and companies, it is possible that the additional requirements could create a tougher environment for companies to operate in. This could be especially true for Japan, South Korea and other Asian markets creating clear regulatory frameworks to support local companies.

In recent months, major markets with top fiat-to-crypto trading pairs -such as the United States dollar, Japanese yen, South Korean won and British pound -have started to increase compliance with the guidelines created by the G-7’s Financial Action Task Force.

As the global cryptocurrency exchange market adapts clearer policies for trading platforms that are described by the FATF as “Virtual Asset Service Providers,” Hong Kong and others that have struggled to clearly define rules for exchanges in the past are expected to embrace more efficient policies.

Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×