Hong Kong’s position as an upcoming crypto business hub is increasingly being noticed and discussed in relevant circles.
In a tweet, Coinbase CEO Brian Armstrong referred to the city-state to emphasize that the United States may lose its position as the world’s financial center for lacking crypto regulations.
Armstrong calls for regulations
“The United States risks losing its status as a financial center in the long term, with no clear rules on cryptocurrencies and a hostile environment from regulators. Congress must act soon to pass clear legislation. Crypto is open to everyone in the world and others are leading. The EU, the UK and now Hong Kong”, Armstrong sayingretweeting a post that said Hong Kong will legalize the sale, purchase and trading of crypto assets for all its citizens starting June 1.
The news that Hong Kong would allow its citizens to buy, sell and trade crypto assets is based on a speech made in January at a web3 conference by Hong Kong’s financial secretary, Paul Chan.
“Hong Kong has completed the legislative work of establishing a licensing system for virtual asset service providers, and the new system will be implemented in June this year…Financial intermediaries and banks will be able to cooperate with licensed virtual asset exchanges to offer transaction services to clients, subject to compliance with relevant regulatory conditions,” Chan said at the conference.
Increased regulatory scrutiny
Brain Armstrong’s criticism of America’s lack of crypto regulation and call for Congress to enact such laws comes in the wake of heightened regulatory scrutiny following the FTX collapse.
SEC Chairman Gary Gensler has proposed new rules for crypto companies acting as qualified custodians of institutional funds. He argued that there should be a transparent mechanism to ensure that client funds are separated from the assets of companies to manage their affairs.
Gensler said this was necessary to ensure that customers do not suffer in the event of bankruptcy or loss of funds due to hacking. Shortly after, a Coinbase executive cleared up that the firm is in line with the proposals of the SEC in this regard.
other regulator uncertainty Coinbase must now take into account the SEC crackdown on staking services, calling them securities. Last week, the agency forced Kraken to stop its staking services offered to US clients and pay a $30 million fine for offering unregistered securities. The Coinbase CEO may be concerned that it could affect his company as well.
The Hong Kong case
Hong Kong is a special administrative region of China that enjoys autonomous status in its legislative and government affairs. While China banned cryptocurrency trading and mining within its jurisdiction in 2021, Hong Kong seems to be emerging as the destination for this type of business with its sights set on China.
The city government has taken quite a few regulatory initiatives, something that is lacking in most jurisdictions around the world, including the US. In December of last year, an amendment to the current legislation brought digital assets into the realm of anti-money laundering and anti-terrorist financing laws.
It also made crypto companies seek licenses before starting operations in Hong Kong. The Hong Kong Securities and Futures Commission (SFC) said in January that release a list of highly liquid digital assets that citizens can trade.
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