People pose for a photo at a promenade next to Victoria Harbour in Hong Kong on Aug 14, 2022. (BERTHA WANG / AFP)
HONG KONG – The Hong Kong Special Administrative Region government has proposed allowing retail investors to trade in cryptocurrencies and crypto exchange-traded funds – a move it hopes will help it rebuild its fintech hub status.
Authorities will start a consultation process on giving retail investors "a suitable degree of access" to virtual assets, Financial Secretary Paul Chan Mo-po said in a keynote address broadcast to the Hong Kong Fintech Week 2022 conference.
"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," he said.
Authorities will start a consultation process on giving retail investors "a suitable degree of access" to virtual assets, Financial Secretary Paul Chan Mo-po said in a keynote address broadcast to the Hong Kong Fintech Week 2022 conference
The government will also review property rights for tokenized assets and explore legalizing so-called smart contracts – self-executing transactions whose results depend on pre-programmed inputs.
These moves are likely to pave the way for real estate security token offerings (STOs), industry players said. STOs are blockchain-based tokens that represent ownership interests or entitle holders to income or dividends generated from real assets.
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In a policy statement issued on Monday morning, the government said it will put in place timely and necessary guardrails to mitigate actual and potential risks so that virtual asset innovations "can thrive in Hong Kong in a sustainable manner.”
"The policy statement explains in detail our vision and approach, regulatory regimes, thoughts on investors' exposures, and our pilot projects to embrace the technological benefits and financial innovations brought by VA,” Chan was quoted as saying in a government statement.
“Our policy stance on VA is now clearly communicated to the global markets and it serves to demonstrate our commitment and determination to explore financial innovations together with the global VA community."
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the government recognized the potential of DLT and Web 3.0 to become the future of finance and commerce, and “under proper regulation they are expected to enhance efficiency and transparency.”
“The government is prepared to embrace this future, and we welcome the clustering of Fintech and VA community and talents in Hong Kong, and we will promote the sustainable development of financial services across the whole VA value chain," Hui said.
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According to the statement, the Securities and Futures Commission will conduct a public consultation on how retail investors may be given a suitable degree of access to VA, and Hong Kong will be open to the possibility of having Exchange Traded Funds on VA in its market.
“With consistency, predictability and clarity gradually established by a comprehensive regulatory framework, we have a solid foundation to further embrace financial innovations and technology development brought by the rapid development of VA globally,” reads the 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.”
The HKSAR government and regulators are also exploring a number of pilot projects to test the technological benefits brought by VA and their further applications in the financial markets.
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These projects include non-fungible token (NFT) issuance for Hong Kong Fintech Week 2022, Green bond tokenization, and e-HKD, the government said.
“The government sincerely invites the global VA community to join hands with us and leverage on Hong Kong's status as an international financial center to realize the potential of financial innovations under a clear, agile and facilitating regulatory environment, adhering to best international standards and practices,” it added.
With Agencies inputs