Industry organization Global Digital Finance has opposed the introduction of a law banning cryptocurrency trading for retail traders in Hong Kong.
Global Digital Finance includes cryptocurrency exchanges BitMEX, Huobi, Coinbase and OKCoin. Members of the group believe that if the law comes into force, it will severely restrict legal cryptocurrency trading among professional investors, blocking access to the market for 93% of the local population. According to a recent CitiBank poll, about 504,000 people (7%) have enough assets to become professional investors. The proposed bill will encourage traders to use unregulated platforms.
In November, the Hong Kong Securities and Futures Commission (SFC) planned to regulate all cryptocurrency exchanges in the administrative region in order to tighten measures against money laundering and terrorist financing. The initiative aims to ensure that Hong Kong’s cryptocurrency regulations are in line with the recommendations of the Financial Action Task Force on Money Laundering (FATF). In January, the Hong Kong government held consultations with the public and industry players on the issue.
The consultation period has now come to an end and the bill is expected to be submitted to the Hong Kong Legislative Council at the end of the year. However, Global Digital Finance Advisory Board Chairman Malcolm Wright said the ban on cryptocurrency trading for retail traders exceeds FATF requirements. This speaks to Hong Kong’s overly tough stance on digital assets. Wright cited the example of Singapore, the United Kingdom and the United States, which, as members of the FATF, allow retail traders to trade cryptocurrencies.
The Hong Kong Bitcoin Association has also stated that restricting retail traders’ access to Bitcoin would be an excess of government authority. The proposed restrictions may apply to ATMs as well. This will significantly slow down the development of innovation and limit access to financial services. At the same time, Hong Kong regulators have a positive attitude towards digital currencies of central banks. In July, the Hong Kong Monetary Authority (HKMA) expressed its readiness, together with the People’s Bank of China (PBOC), to test the digital yuan for international payments.
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