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Hong Kong government considers permitting retail investments in crypto

Hong Kong government considers permitting retail investments in crypto

As the cryptocurrency industry continues to expand and investors show increasing interest, more governments have either already jumped on the bandwagon or are starting to consider allowing their citizens to participate in crypto investments.

Indeed, Hong Kong’s regulators are mulling permitting retail investors to directly participate in investing in digital assets as they assume a separate stance from that of the government of mainland China, South China Morning Post reported on October 17.

According to the report, the possible shift in attitude is taking place amid an exodus of financial technology talent from Hong Kong that is eroding the territory’s status as a crypto industry hub, much to the advantage of Singapore as its main competitor.

Previously, the government of Hong Kong announced it would be revealing its new policy statement on cryptocurrencies during this year’s FinTech Week, in line with a “vision of developing Hong Kong into an international virtual assets center,” as the officials said.

One country, two systems

During an InvestHK panel discussion on October 17, Elizabeth Wong, director of licensing and head of the fintech unit of the Securities and Futures Commission (SFC), said that the ‘one country, two systems’ principle was forming the basis for ‘Hong Kong’s financial markets’.

Commenting on the SFC’s consideration to allow retail investors to “directly invest into virtual assets,” Wong acknowledged that the industry has become more compliant and added that:

“We’ve had four years of experience in regulating this industry. (…) We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.”

Cracks in China’s crypto curb?

It is also worth noting that China has a country-wide ban on crypto services, but that exceptions exist, as a Chinese court recently ruled that interested investors can still trade cryptocurrencies, as long as they are treated as virtual assets and not act as a currency, as Finbold reported.

On top of that, China has retained its ranking among top ten countries leading in cryptocurrency adoption for the past two months, according to the report published on October 20 by crypto analytics platform Chainalysis.

Top ten countries in crypto adoption. Source: Chainalysis

As a reminder, China introduced the ban on cryptocurrency trading and mining last year on the grounds that the industry was endangering the country’s financial stability, leading to a significant drop in the price of Bitcoin (BTC) at the time of introduction.

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