With cryptocurrency investors increasingly worried about Hong Kong’s regulatory ambiguity on crypto, a number of major crypto-focused businesses and events have decided to move their activities to Singapore and other countries and territories considered as more friendly to their industry, as indicated by local observers.
Hong Kong’s lawmakers are advancing plans to require licensing for crypto trading platforms through an amendment to the city’s anti-money laundering legislation. This legislative change would require firms to offer such services exclusively to professional investors with a portfolio of at least HK$8 million (US$1 million). Should the amendment go through, the move could discourage numerous crypto investors from conducting their business in Hong Kong.
“There was a point in time where Hong Kong had a leading position in cryptocurrency and business related to crypto,” Padraig Walsh, a partner at the Hong Kong law firm Tanner De Witt, told local daily The South China Morning Post. “That isn’t the case any more, and I think regulation has been a key part of the reasons why.”
Last July, the bill was deliberated by a relevant committee of Hong Kong’s Legislative Council.
Indicating a negative trend that could impact on Hong Kong’s capacity to lure crypto-oriented businesses in the coming years, this year’s edition of Token2049, a large industry conference that was held in the Chinese city before the pandemic, will be held in Singapore next week for the first time in the event’s history.
“A lot of the guys were in Hong Kong, but for one reason or another they have moved to different places,” according to Yang He, the co-founder and CEO of Hong Kong-based crypto asset management firm Aspen Digital. “Obviously it’s a shifting world and crypto is very fluid, but part of that is a lack of clarity and a lack of the speed of things.”
Meanwhile, the Hong Kong Monetary Authority (HKMA), the territory’s de facto central bank, is aiming to launch trials of the e-HKD, its central bank digital currency (CBDC). Trials are to begin in the fourth quarter of 2022.