The Financial Service and the Treasury Bureau (FSTB) of Hong Kong today proposed to ban crypto trading services for retail traders and require a crypto license for exchanges to operate in the country. The new proposal would only allow professional traders with a portfolio of HK$8 million ($1.03 million) to avail any crypto trading services. As per a recent survey, only 7% of the population in the country qualify to be counted as professional traders.
The government has made a similar proposal back in March this year and this Friday doubled down on the same with a plan to turn its proposals into law in the upcoming 2021-22 session of the city’s legislative assembly.
Breaking! #HongKong Government proposes to empower Securities and Futures Commission to restrict or prohibit the operations of licensed virtual asset service providers and their associated entities when necessary. #cryptocurrency
— 8BTCnews (@btcinchina) May 21, 2021
At present, the crypto exchanges are required to register with the Securities and Futures Commission but the government has an ‘opt-in’ approach which means the exchanges can opt against registering and can have retail traders.
The exchanges currently operating without a license are liable to a fine of HK$5 million and imprisonment for seven years; And, in the case of a continuing offense, a further fine of HK$100,000 for each day during which the offense was continued.
Hong Kong Looking to Tighten Regulation Around Crypto Service Provider
Hong Kong was seen as one of the most progressive nations when it comes to fintech regulations, but the recent influence of China in the administration could potentially be one of the key reasons behind the recent tightening regulatory policies around crypto assets, something which is strictly prohibited in mainland China. Recently three associate institutions of People’s Bank of China issued notice for financial service providers to refrain from offering crypto trading services.
Some of the world’s leading crypto exchanges in the world including Binance, OKEx, Gemini, and many others offer their service to Hong Kong citizens. The new proposed legislation would not only curtail the crypto traders in the country but would also make it more complex for crypto exchanges to function in the country.