Chinese government proposals published on Friday are seeking to mandate cryptocurrency exchanges operating in Hong Kong to secure a license from the city’s markets regulator and restrict cryptocurrency services to professional investors.
Government and financial regulators in most countries are still seeking a viable solution or policy on whether and how they should regulate the cryptocurrency industry having particular concerns on investor protection and money laundering prevention.
Major cryptocurrencies today are having sporadic movements and volatility further raising concern among regulators as to their potential as mainstream investments.
Elon Musk and the Chinese government policies are inducing this volatility, swaying the investor’s behaviors and affecting market movements.
Numerous cryptocurrency exchanges are currently operating in Hong Kong. City regulators are giving them options on whether to apply for a license or not.
Crypto industry associations are opposing the government’s proposal to stop exchanges from offering services to retail investors, citing that it could only drive investors to seek unregulated venues.
Hong Kong’s Financial Services and the Treasury Bureau (FSTB) said that “confining the services of a VA exchange to professional investors…. is appropriate at least for the initial stage of the licensing regime.”
Hong Kong law states that a professional investor must have a portfolio of HK$8 million ($1.03 million).
The FSTB state that the proposals are intended for the upcoming 2021-22 session of the city’s legislative assembly.
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