If the proposed law becomes law, cryptocurrency trading will only be available to professionals with $ 1 million in their investment portfolio.
The Hong Kong government has announced that it is moving forward with plans to make licensing of local crypto exchanges compulsory. This step will only allow professional investors to trade cryptocurrencies. To be a qualified investor, you need to have at least $ 1 million in your portfolio. This requirement will exclude a significant proportion of crypto investors operating in Hong Kong.
Hong Kong wants to regulate crypto exchanges
The idea surfaced earlier when the financial market regulator of the Autonomous Administrative Okrug proposed something similar in November last year. The Hong Kong Cryptocurrency Exchange Defense Group has contested the proposal and the rules attached to it.
The group even went as far as saying the proposed law would push retail investors towards unregulated platforms.
Hong Kong Financial Services and Treasury Authority (FSTB) published consultation notice today. On the consultation concluded that all crypto exchanges operating in their jurisdictions must be licensed. Currently, cryptocurrency exchanges can choose to "subscribe" and obtain license status in Hong Kong.
If the proposals do go through and become law, the jurisdiction's financial regulator, in turn, is likely to have final authority over the crypto industry in Hong Kong. The Agency also argued that the structure was in line with the recommendations of the Financial Action Task Force.
Asia and cryptocurrency continue to butt
While Hong Kong is making news today about the proposed rules, it is far from the only Asian jurisdiction trying to do something similar. In early May, Thailand adopted rules that also apply to crypto exchanges. The Thai Anti-Money Laundering Authority will now require local exchanges to verify customers' identities using a dip-chip machine.
The process requires clients to be physically present to complete the process. Thailand has also proposed rules similar to those that Hong Kong is considering, which would exclude most of the retail traders from the cryptocurrency market. However, negative public outcry forced the government to withdraw the proposal.
Another big name looking to further regulate cryptocurrencies is China. The country has taken an anti-crypto stance and banned all transactions related to cryptocurrencies. As part of China's latest attempt to restrict the digital trading market, they have also banned financial institutions and payment companies from providing any service related to cryptocurrency transactions.
The government also primarily wanted investors to refrain from speculative cryptocurrency trading. Under the ban, banks and online payment channels cannot offer users any services using digital currency.