Regulators in Hong Kong are ready to impose a ban on cryptocurrency trading for retail investors. In Nov 2020, Hong Kong’s Financial Services and the Treasury Bureau (FSTB) issued its Legislative Proposals to limit cryptocurrency trading for professional investors. Recently, a leading crypto industry body Global Digital Finance (GDF) said this proposal if implemented could drive investors toward unregulated platforms.
Hong Kong Planning to Turn Ban on Retail Crypto Trading into Bill
Following consultation with industry bodies and members of the public that ended in January, the government said it planned on turning the proposal into a bill. The draft proposals were under public consultation till 31 Jan 2021. The bill would be introduced to the city’s legislative council later this year.
Hong Kong’s Financial Services and the Treasury Bureau published a proposal in November 2020 to limit cryptocurrency trading to professional investors. Hong Kong’s security rules define professional investors as individuals with a portfolio of at least HK$8 million, or US$1 million.
Recently, in response to the bill, a leading crypto industry body Global Digital Finance (GDF) said this proposal was a major concern. GDF includes members from leading cryptocurrency exchanges such as Bitfinex, Coinbase, Huobi.
GDF added that if the proposal is enforced, it might see non-professional investors move towards unregulated platforms that might create new areas of financial crime risk. The crypto advocacy body even highlighted that other FATF member countries such as Singapore, the UK, and the U.S. have allowed retail investors to trade cryptocurrencies.
Hong Known for Crypto-Friendly Regulations
As per Hong Kong law to qualify as a professional investor, one must own an investment portfolio of at least HK$8 million (US$1 million).
Meanwhile, according to a survey, only 504,000 people (or 7%) of the city’s population owned more than US$1 million, and therefore, qualified to be professional investors in mid-2020. If the new crypto regulation is passed, it will deprive more than 90% of the population of investing in cryptocurrencies.
Hong Kong is usually known as the most active regions for crypto investors, due to its cryptocurrency-friendly regulations. If enforced, the new proposal would negatively impact Hong Kong’s reputation being the most crypto-friendly region in Asia.