Hong Kong, one of the world’s leading financial centers, has long been committed to cryptocurrency and blockchain technology, but it faces a competitive challenge from the cryptocurrency-friendly United Arab Emirates.
This is a fact recognized by panelists Joseph Chan, Hong Kong’s undersecretary for financial services and treasury, and Johnny Ng, founder of investment firm web3 Goldford Group, who spoke at Consensus Hong Kong.
“The UAE is really aggressive,” said NG, a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) since 2018.
He said places like Dubai and Abu Dhabi have established a strong regulatory framework for virtual assets, and each region has also placed it under the auspices of a single, dedicated regulatory authority. Korea, which has several million crypto users and investors, also has a particular government body responsible for crypto issues, Ng added.
“I think Hong Kong’s legislative council can recommend that the government do more, including creating a single position to oversee all these things,” Ng said. “As a legislator, I will help the government establish ties with members of Congress from other countries, for example Korea.”
Hong Kong Treasury’s Chan said Hong Kong’s enduring appeal is that there are “no surprises” from regulators, who have demonstrated consistent commitment to digital assets.
“Our regulations are transparent, certain and predictable, and we have stuck to them from the beginning,” Chan said. “This compares to other jurisdictions, without naming names. Whether it’s a crypto winter or not, Hong Kong has accompanied the development of the digital assets industry. If you look at other jurisdictions, as things change and there are ups and downs, they might turn around.”
Under Hong Kong’s compulsory licensing regime for virtual asset trading platforms (VATP), 11 licensees have been granted under the framework, which came into effect two and a half years ago.
Regarding the stablecoin regulatory regime that began last August, Chan said the first batch of licenses was planned for the first quarter of this year.
The licensing regime for digital asset traders and custodians comes next, and is expected to be presented by Hong Kong’s financial secretary later this year, Chan added, highlighting the multiple consultations and readings of draft laws that must first take place.
“It seems like a long process, but it’s very important,” Chan said. “Because it means everyone in the industry knows what’s coming, you have plenty of time to raise concerns, so there will be no surprises and everyone knows what’s going to happen next.”
