Julia Leung Fung-yee said the new licensing system for virtual asset providers will protect investors, given the risks faced by financial institutions. Including such companies in the regulatory system was the only way to innovate and build market confidence after the collapse of the FTX exchange.
The SFC chair noted that cryptocurrency regulation in Hong Kong is a perfect example of the expression “one country, two systems.”. It is about the fact that in mainland China cryptocurrencies are completely banned since 2021. Hong Kong has taken a different stance and continues to attract cryptocurrency companies.
A bill to regulate cryptocurrencies was drafted by Hong Kong authorities
in December 2022, less than a month after the collapse of the FTX exchange.. The law requires cryptocurrency companies to follow strict anti-money laundering requirements. The region’s retail traders have recently been able to trade digital assets.
In May, it was reported that authorities in the region launched a pilot program for the digital Hong Kong dollar.