The cryptocurrency industry in Hong Kong has been trying to fight a forthcoming law that is meant to control legal crypto trading by professional investors. This law could lock out 93% of the local population from the market.
The law might push retail traders to unregulated platforms
An industry body, Global Digital Finance, made comments to the South China Morning Post that was published on Feb. 15 regarding the same law, warning that it would be possible to push retail traders to use unregulated platforms. Global Digital Finance is a representation of known crypto exchanges like Huobi, Coinbase, BitMEX, and OKCoin. It has been one of the industry’s most vocal actors to push back against this legislation.
The proposal was first published in Nov. 2020 by Hong Kong’s Financial Services and the Treasury Bureau as one way of toughening Anti-Money Laundering and counterterrorist financial measures. The move is also in line with measures to streamline domestic regulations according to recommendations from the Financial Action Task Force (FATF).
However, the tough stance taken by the Bureau towards cryptocurrency trading in mainland China is more than the requirements from FATF’s framework indicate. This is correct, as pointed out by Malcolm Wright, the chair of Global Digital Finance’s advisory council. He has said that FATF members; Singapore, the United Kingdom, and the United States are all still allowing retail traders to take part in the cryptocurrency market.
Government consultancy period ended
The government spent time in January to consult with industry bodies and members of the public regarding the proposal. Since this consultation period is now over, the proposal is expected to be made into a bill and introduced to Hong Kong’s legislative council later in the year.
The estimate made by South China Morning post that 93% of the domestic population would be affected by this ban is based on a current CitiBank survey that concluded that around 7%, 504,000 people, possessed enough assets to meet the requirements to become professional investors.
A Bitcoin association of Hong Kong representative has argued that the restriction of retailers from accessing Bitcoin would be an overstep from the government and its goals of promoting innovation and financial inclusion. These proposed restrictions could also apply to Bitcoin ATMs and can considerably increase the dispatch of Hong Kong’s existing crypto licensing rules for businesses.
Image courtesy of pixabay