Hong Kong Regulator Expects Increased Cryptocurrency Market Growth with Enhanced Oversight

Leung Fong Yi, CEO of the Hong Kong Securities and Futures Commission (SFC), believes that including virtual asset service providers in the regulatory regime is essential for embracing crypto innovation and building trust in the market.

During an executive dinner in Bangkok organized by the Hong Kong Economic and Trade Bureau, the corporation’s head office, and InvestHK, Leung Fong Yi talked about the challenges the cryptocurrency market has faced in the past year.

She emphasized that a few cryptocurrency-related companies have defaulted or gone bankrupt, posing risks to the entire industry.

Leung emphasized the importance of regulating virtual asset service providers to address concerns and restore investor confidence in the crypto market. In her view, this will help embrace innovation and build market confidence.

Hong Kong does not aspire to be a trading hub for cryptocurrency

The SFC CEO noted that Hong Kong’s new licensing regime for virtual asset service providers, which went into effect recently, provides comprehensive coverage for all public interactions with crypto assets. Its primary objective is to protect investors while taking into account the risks faced by financial institutions.

However, realizing the importance of cryptocurrency trading within the virtual asset ecosystem, Leung made it clear that Hong Kong does not aspire to become a cryptocurrency trading hub.

She expressed Hong Kong’s openness to related technologies applied to financial services, such as bond tokenization and investment funds.

In addition, she acknowledged that Hong Kong still has progress in creating a robust cryptocurrency ecosystem, expressing confidence that the convergence of the city’s fintech virtual asset community will accelerate its development.

Since the FTX bankruptcy, jurisdictions that previously welcomed crypto assets have tightened regulations, with some adopting enforcement as a regulatory approach.

Leung contrasted that with Hong Kong’s supervision of virtual assets, which she said is transparent, consistent and predictable.

She further stressed that the introduction of the new licensing regime embodies the “one country, two systems” principle, as mainland China continues to ban cryptocurrency trading.