Author of the article: Meta Era guest author Crypto’s Big Cousin」
introduction
It has been a full year since the Policy Declaration on the Development of Virtual Assets in Hong Kong issued by the Hong Kong Financial Services and the Treasury Bureau in October 2022. This article will sort out the policies and regulations issued by the government during this year. With the last round of prosperity in the cryptocurrency world, more and more markets have set their sights on the cryptocurrency field, and many institutions and individual investors are eager to give it a try. However, due to the uncertainty of policies around 2021, a large amount of capital and institutions have “Exodus” to crypto-friendly countries such as Singapore and the United States. With the Hong Kong government officially announcing the opening and tolerance of the Crypto market in 2022, many capitals have chosen to return to their own battlefield. So on the first anniversary of the development of virtual assets in Hong Kong, what are the major policies to promote virtual assets? What about the development? This article will introduce and follow up the relevant policy content one by one!
Hong Kong Web 3.0 support policy review
After Hong Kong supported the vigorous development of NFT, Gamefi and other tracks, the Hong Kong government first announced on October 16, 2022 that it would promote the digital Hong Kong dollar as the first bridge to link virtual assets, and then issued government tokenized green bonds to show support for the distribution Ledger technology (efficient, reduced costs, increased trust).
During Hong Kong Technology Week (October 30, 2022), the Hong Kong government announced that it would establish a US$4 billion technology fund to support entrepreneurship in blockchain, Web3 and other technology companies. The Hong Kong government will use practical policies to Support the development of the industry. What followed was the adoption of ETFs,
On the same day, the Hong Kong Securities and Futures Commission issued a letter authorizing the public sale of virtual asset futures exchange-traded funds ETFs.
Figure 1 CSRC ETF Explanatory Letter
The Securities Regulatory Commission only allows the issuance of index funds for virtual asset futures traded on traditional regulated futures exchanges, and only approves index funds for Bitcoin futures and Ethereum futures traded on the Chicago Mercantile Exchange.
Based on the first allocation, Hong Kong Financial Secretary Paul Chan Mo-po will allocate HK$50 million for the ecological construction of Web3 in April 2023. If the bear market can see the governments emphasis on Web3 and its financial support, I believe that in the bull market , outstanding Web3 entrepreneurs can get greater help from the government, both in terms of economic and policy support.
Figure 2 Director Chen Maobo gave a speech on Web3
regulatory policy process
As early as November 2019, Hong Kong regulated cryptocurrency exchanges. Only licensed CEXs could provide investors with corresponding services. However, only one CEX (OSL) received a license until the Hong Kong government officially announced its full support for the Crypto industry. development, this is when it ushered in a turning point. According to the official website of Hong Kong SFC, many exchanges are currently queuing up to apply for licenses. The exchange approved in 2022 is HashKey. Meex is currently the Hong Kong exchange whose application has not been rejected in 2023. The application results will be announced before 12/10/2023.
In 2022, exchanges will only be open to professional investors and will not open retail businesses to retail investors for the time being. However, in August 2023, the Hong Kong government announced that listed exchanges can sell to retail investors, which is enough to prove that the Hong Kong government is promoting the globalization of cryptocurrency assets. determination.
There are also differences in the licenses issued by Hong Kong SFC. The most critical ones are No. 1 and No. 7 licenses (for securities trading and provision of automated trading services respectively). This is a necessary condition for the implementation of a compliant exchange. No. 9 license is also the focus of the market. , the difference is that it can host user funds, which is a necessary condition for private placement or public placement. The exchange does not currently need to change its license.
Regarding the supervision of NFTs, the Hong Kong Securities and Futures Commission issued an announcement Reminding Investors to Pay Attention to NFT Risks on June 6, 2022, stating that most NFTs are intended to represent their related assets, such as electronic images, artwork, music or videos. A one-of-a-kind version. Overall, if an NFT is a collection that truly exists in digital form, activities related to it will not fall within the scope of the Securities Regulatory Commission. Gamefi is the same as NFT. Everything that can earn income, such as Token, will be included in the list of regulatory policies to ensure the rights and interests of consumers.
In terms of transaction currencies, Tang Yi, president of the Hong Kong Blockchain Association, said: Tokens such as Bitcoin and Ethereum are defined as functional Tokens (Utility Tokens), so they do not need to be registered and audited. Each one is in the market Tokens in circulation need to go through independent judicial cases or even legal proceedings to determine whether they are security tokens or functional tokens. Like Ripple, you can submit legal opinions to the China Securities Regulatory Commission and litigate with the China Securities Regulatory Commission to argue against them. The explanation is incorrect.
Figure 3 Tradable currencies
Stablecoin supervision, according to the Crypto-Assets and Stablecoins Discussion Paper issued by the Hong Kong Monetary Authority in 2023, stablecoins should be fully supported and allowed to be redeemed at face value, and they have high liquidity. Stablecoins based on arbitrage or algorithms will be rejected, such as DAI. This move will avoid potential property losses to investors caused by algorithmic stablecoins such as LUNA.
The exchange guarantees that according to documents published by the Hong Kong Securities and Futures Commission, platform operators must maintain a paid-up share capital of no less than HK$5 million at all times (i.e., the minimum amount of paid-up share capital). The platform operator should beneficially possess fully liquid assets in Hong Kong at all times, such as cash, deposits, treasury bills and certificates of deposit (but not virtual assets), the amount of which should be equal to the platform operator’s actual assets calculated on a continuing basis for at least 12 months. Operating expenses. In addition, platform operators should establish and implement strict internal control measures and governance procedures in terms of private key management to ensure that all encryption seeds and private keys are securely generated, stored and backed up. The seeds and private keys are stored in Hong Kong.
summary
From the implementation of supportive policies to regulatory policies, we can see the determination and attitude of the Hong Kong government towards the development of the virtual asset industry. In terms of support, open policies and financial assistance have attracted more and more entrepreneurs to embrace the Hong Kong cryptocurrency industry.
From the perspective of regulatory policies, the most direct help is to open retail trading licenses, not just professional investors. This will greatly promote the range of user groups in Hong Kong’s cryptocurrency industry, and also strictly regulate the exchange’s online currencies and businesses. , while users gain more trading rights, the security of users is guaranteed to a great extent. Hong Kong will eventually become a friendly harbor for the cryptocurrency industry and return to its peak!
