Hong Kong SFC Chief emphasizes crypto’s importance post-FTX bankruptcy. New regulations protect investors, foster innovation, and attract Web3 firms.
After FTX’s bankruptcy, Julia Leung Fung-yee, the CEO of Hong Kong’s Securities and Futures Commission, claimed that integrating virtual assets into the regulatory framework was essential.
Protecting Investors And Promoting Innovation: Hong Kong’s Response To FTX’s Failure
Following the failure of cryptocurrency exchange FTX last November, Julia Leung Fung-yee, CEO of Hong Kong’s Securities and Futures Commission (SFC), addressed Hong Kong’s adoption of Web3 legislation. She noted that crypto trading is a crucial component of the ecosystem for virtual assets.
Leung allegedly emphasised in a recent speech how the new licencing scheme for companies that offer virtual assets will protect investors while also taking into account the dangers that financial institutions confront. After the bankruptcy of FTX, the chief believed that the only way to embrace innovation and boost market confidence was to include virtual asset providers in the regulatory framework.
The FTX failure was used by Hong Kong to lessen the regulatory risks connected to centralised exchanges. Nearly 30 days after the exchange crisis started, in December, its legislative council added virtual asset service providers to the same laws that regulate conventional financial institutions.
Fostering Inclusion And Innovation: Hong Kong’s Regulatory Framework For Virtual Exchanges
To virtual exchanges seeking to establish a presence in Hong Kong, the new regulations introduce stringent AML criteria and investor protection measures. It also includes a new licencing system that enables small-scale investors to trade in virtual assets. Professional investors and traders with at least $1 million in bankable assets were the only ones allowed to trade digital assets until recently.
Leung asserts that China’s “one country, two systems” concept is well exemplified by the bitcoin licencing system in Hong Kong. While Hong Kong adopted a different strategy by establishing a friendly atmosphere for cryptocurrency industry, cryptocurrencies have been prohibited in Mainland China since 2021.
More than 150 Web3 businesses have opened offices in Hong Kong’s Cyberport over the course of the last 12 months. The local government developed the digital centre to foster innovation. The surge followed the government’s $7 million ($50 million) investment to hasten Web3 development.