Hong Kong announces virtual asset policy plan, proposes letting retail investors trade cryptos

Hong Kong’s government announced a policy statement on virtual asset businesses on October 31, including proposals to set up a regulatory framework for stablecoins and to allow retail investors to trade in cryptocurrencies.

The announcement comes as the city is hosting a high-profile fintech conference this week. It is also seen as a move to attract international virtual asset (VA) investors as Hong Kong vie with Singapore for the status of a global fintech hub.

“We will put in place timely and necessary guardrails to mitigate actual and potential risks in line with international standards, so that VA innovations can thrive in Hong Kong in a sustainable manner,” the Hong Kong government said in a statement.

“As we step up our preparatory work for a new licensing regime for VA Service Providers, we are ready to engage with global VA Exchanges and invite them to set foot in Hong Kong for new business opportunities,” it added.

The city’s market regulators will launch a consultation on giving retail investors a “suitable degree of access” to virtual assets, and on the possibility of setting up Exchange Traded Funds (ETFs) on VA in Hong Kong. They will also work on a regulatory regime on stablecoins, officials said.

Last year, the city’s government had proposed limiting crypto trade to professional investors only. Observers said the restrictive approach prompted some local start-ups to move to Singapore and Dubai.

At the opening of the Hong Kong Fintech Week conference on October 31, Financial Secretary Paul Chan said in a keynote speech that a bill to establish a statutory licensing regime for virtual asset service providers was going through in the legislature.

“We want to make our policy stance clear to global markets, to demonstrate our determination to explore financial innovation together with the global, virtual-assets community,” he told the forum via a video link on Monday. Chan was unable to attend in person as he caught Covid last week.