(Kitco News) - Paul Chan, Hong Kong’s Financial Secretary, has indicated that the government of the special administrative region of the People’s Republic of China remains committed to developing its cryptocurrency infrastructure and recently completed the legislative work needed to set up a licensing system for virtual asset service providers (VASPs).
According to a report from Radio Television Hong Kong (RTHK), Chan made the comments during a speech at an event hosted by the state-run incubator Cyberport, declaring that Hong Kong has now become a hub for connecting high-quality virtual asset companies.
Chan highlighted the fact that the local government and regulators are open to collaboration with crypto and fintech startups in 2023, revealing that numerous leading high-tech startups have already contacted the government to explore the possibility of establishing their international headquarters in Hong Kong.
Under the new licensing system for VASPs, anti-money laundering, anti-terrorism financing, and investor security requirements have been aligned with the requirements placed on traditional financial institutions, according to Chan. “I believe that they can provide a certain degree of market recognition for virtual asset exchanges,” he said.
“The government expects to provide the market with a suitable proportion of supervision to unlock Web 3.0 and the potential of other technologies,” he said, adding that this would help address risks associated with financial stability, investor protection, and improper capital activities.
Government and regulatory agencies in the region are also conducting multiple pilot projects designed to test the technical advantages of virtual assets and explore related applications. This includes a pilot program to issue tokenized green bonds for institutional investors and an examination of the cross-border use of the e-HKD, Hong Kong’s central bank digital currency (CBDC).
According to Chen Haozhi, deputy director of the Bureau of Financial Affairs and Treasury Affairs, the Securities and Futures Commission (SFC) will also be establishing regulatory rules for virtual asset exchanges with the goal of starting public consultation in early 2023.
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Hong Kong has been increasing its efforts to firmly establish itself as a global cryptocurrency hub in recent months. In October, its government announced that it was exploring a possible lift of the ban on retail crypto trading in the region as part of a plan to boost economic growth by tapping into interest in the digital asset sector.
And in mid-December, the Hong Kong stock exchange launched the region's first two exchange-traded funds (ETF) for cryptocurrency futures, which raised $73.6 million ahead of their debut.
According to a report from Forex Suggests, Hong Kong was rated as the most crypto-ready region in 2022 after ranking in the top three in several categories on the survey, including the number of blockchain startups per 100,00 people and the number of crypto ATMs proportional to the population. A significant part of the special administrative region’s appeal is that it doesn’t apply capital gains taxes on cryptocurrencies.
