Yesterday, the Hong Kong Government announced a consultation to enlist public opinion on legislative proposals designed to enhance anti-money laundering and counter-terrorist financing (AML/CTF) regulation in Hong Kong. Cryptoassets (digital assets) were included in the consultation with the introduction of a licensing regime for virtual asset services providers (VASPs).
While the announcement rattled some crypto industry insiders, others see recognition and regulation as a necessary step in mainstreaming digital assets – including cryptocurrency. Don Guo, CEO of Broctagon, is one of those individuals. In a comment shared with CI, Guo had this to say:
“Although this is an immediate knock to the local crypto industry, this is a positive. The cryptocurrency industry has lacked a regulatory consensus and framework to ensure safe trading. While the landscape has typically been fragmented, it is encouraging to see Hong Kong take the steps to establish a mainstream-like environment for participants looking to trade crypto.”
“That said, the conversation is far from over. Although this news move may protect investors and encourage wider uptake, the UK’s FCA has recently banned the trading of crypto derivatives altogether, and other global governments continue to drag their heels with regards to regulation. Hence, the industry continues to be perceived as a “Wild West” by many.”
“The trading infrastructure has become far more sophisticated and previous challenges such as illiquidity are being eroded, so it’s time the regulators caught up with the markets. Countries like China, Singapore and now Hong Kong continue to lead the way in terms of taking positive steps towards crypto regulation. As more investors – particularly institutions – continue entering the space, governments must prioritise setting a clear precedent so participants can invest safely.”
Regulation versus an outright ban is clearly a preferred path for crypto industry participants. While platforms and industry participants may have to adapt, regulation is a requirement for broader involvement by both institutions and retail money.