If the proposed act passes into law, crypto trading will only be available to professionals with $1 million in their investment portfolio.
The Hong Kong government has announced it is moving forward with plans to make licensing local crypto exchanges mandatory. The move will allow crypto trading to be done only by professional investors. To be a qualified investor, one must hold at least $1 million in their portfolio. This requirement will exclude a massive portion of crypto investors operating in Hong Kong.
Hong Kong looks to regulate crypto exchanges
The idea has surfaced before, with the financial market’s regulator of the autonomous administrative region proposed something similar last November. An advocacy group of Hong Kong’s crypto exchanges had challenged the proposal and the regulations that come along with it.
The group even went so far as to say that the proposed law would push retail investors toward unregulated platforms.
Hong Kong’s Financial Services and Treasury Bureau (FSTB) published a notice today about the consultation. It stated that the consultation concluded that all crypto exchanges operating within their jurisdictions need to be licensed. As things stand now, crypto exchanges can choose to “opt-in” and earn their license status in Hong Kong.
If the proposals do in fact pass and become law, the jurisdiction’s financial regulator will in turn apparently have ultimate power over the crypto industry in Hong Kong. The agency also argued that the framework is aligned with the recommendations from the Financial Action Task Force.
Asia and crypto continue to butt heads
While Hong Kong is making news today with the proposed regulations, they are far from the only Asian jurisdiction to attempt something like this. In early May, Thailand passed regulations that also relate to crypto exchanges. The Thai Anti-Money Laundering Office will now require local exchanges to verify customer identities via a “dip-chip” machine.
The process requires that clients be physically present to complete this process. Thailand also has proposed rules similar to the ones Hong Kong is looking into that would exclude a large portion of retail traders from the crypto market. The negative public response, however, caused the government to withdraw that proposal.
Another big name looking to further regulate cryptocurrency is China. The country has taken an anti-crypto stance and has banned all crypto-related transactions. In China’s latest attempt to clamp down on the digital trading market, they have also banned financial institutions and payment companies from providing any service related to crypto transactions.
The government also wanted investors against speculative crypto trading to boot. Under the ban, banks and online payment channels can not offer users any service involving digital currency.