Crypto Regulation in Hong Kong: Dual Licensing System Alters the Market

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by Giorgi Kostiuk

2 years ago

A recently published report by the People’s Bank of China highlights global trends in cryptocurrency regulation, addressing challenges posed by unregulated sectors. Hong Kong's proactive licensing approach is emphasized as it seeks to align with international standards.

China's Financial Stability Initiative

The People's Bank of China stresses the importance of focusing on unregulated financial market segments to maintain financial system stability. Hong Kong's decision to actively manage crypto-asset licenses is viewed as a significant positive step towards aligning with global trends.

Dual Licensing in Hong Kong

Hong Kong employs a dual licensing system to properly regulate virtual assets. Securitized financial assets fall under the Securities and Futures Ordinance, while non-securitized tokens are regulated by the Anti-Money Laundering Ordinance. Banks like HSBC and Standard Chartered are required to regularly check on crypto exchanges, which assists in reducing potential risks and promoting openness.

Global Tightening of Crypto Regulations

The report highlights regulatory changes in over 51 countries that have enacted bans or stricter rules for crypto assets. In the US, the Securities and Exchange Commission (SEC) increased scrutiny, rejecting numerous [Bitcoin ETF](https://cryptofrontnews.com/bitcoin-etf-growth-and-political-chaos-reasons-why-btc-could-surge-to-200k-by-2025/) applications until approving a spot ETF in 2024. The European Union has adopted the Crypto-Asset Market Regulation Act to create uniform rules by the end of 2024. The UK and Singapore also introduced unique steps for digital asset regulation.

The global community continues to move towards stricter and more consistent crypto regulations. This is aimed at enhancing financial system stability and minimizing risks.

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