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Hong Kong Set to Legalize Retail Crypto Trades

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Hong Kong has made a proposal to authorize cryptocurrency trades for retail investors.


A year after proposing to limit cryptocurrency trades to institutional investors, Hong Kong is set to permit retail trades in the digital asset class. The government of Hong Kong’s proposal would legitimize retail trades in cryptocurrencies and crypto-focused exchange-traded funds (ETFs).

The recent review of the past proposal is an attempt to establish a functional financial hub in the special administrative region of China. In addition to authorizing crypto retail investments, Hong Kong is looking to pilot its NFT issuance initiative and CBDC project, a Reuters article noted.

Hong Kong’s recent counter-proposal has been partly influenced by criticisms the government has faced due to the limitation of digital asset investments. 

Besides the sharp criticisms, Hong Kong’s policies on cryptocurrency investments have created unfavorable conditions for crypto entities, prompting a mass exodus to more crypto-friendly jurisdictions, including Singapore and the UAE.

The city seeks to remedy this worrisome trend in the latest wave of policy reviews. Hong Kong will also look into proper policy implementation for stablecoins concerning stabilization, redemption mechanism, and governance. This will ensure proper consumer protection, considering the recent wave of debacles in the crypto scene.

Hong Kong’s attempt at establishing a more tolerant crypto framework comes amidst Singapore’s policy reformation efforts looking to place stricter measures on retail crypto investors. The Monetary Authority of Singapore recently released two consultation papers prohibiting retail investors from purchasing crypto with credit cards or borrowing funds.

“We want to make our policy stance clear to the global market, to demonstrate our determination to explore fintech with the global virtual asset community,” Hong Kong’s Financial Secretary, Paul Chan Mo-Po, said. Chan also mentioned that a consultation process would be implemented to permit a degree of crypto investment access for retail investors.

Hong Kong now aims to welcome investors who would seek shelter elsewhere after driving away local investors with its previous policies as the city wants to be apart from mainland China.

“This is a positive move as it sends out a strong message that Hong Kong is taking a different approach in regulating its capital market,” said Adrian Wang, CEO of Metalpha.

Recall that the Hong Kong government introduced a proposal to require a license of operation for cryptocurrency exchanges in May of last year. This proposal also declared that exchanges would only be allowed to provide services to institutional investors.

As The Crypto Basic previously reported, in February, the Hong Kong Monetary Authority (HKMA) and the Hong Kong Securities and Futures Commission (SFC) restricted exchanges from offering complex crypto products to non-professional investors.

Hong Kong is currently reviewing past unfavorable policies. This review will contribute to its goal of establishing a crypto hub. A Forexsuggest survey earlier this year indicated that Hong Kong remains the most crypto-ready jurisdiction in the world.

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Albert Brown
Albert Brownhttps://thecryptobasic.com/
Albert Brown is a cryptocurrency investor and journalist who has been in the nascent space since 2017. His love and passion for technological innovations made him delve deeper into the world of blockchain and cryptocurrencies. As a journalist, Brown has written on several crypto-related topics that have been referenced by popular industry players like Tyler Winklevoss, Binance CZ, etc.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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