The Hong Kong government has undergone a major shift in its attitude toward cryptocurrency trading. It hopes to establish Hong Kong as an international hub for virtual asset trading by issuing licenses and planning to issue more types of licenses, including VASP licenses.
The government has released a consultation paper seeking feedback until the end of March. The paper covers financial and currency trading and suggests that in the future, non-professional investors should invest in cryptocurrencies through licensed platforms to protect their interests.
In the past two years, only professional investors and licensed platforms were allowed to participate in trading. However, recent events such as LUNA and FTX have forced non-professional investors to turn to unlicensed platforms, increasing their risks.
The Securities and Futures Commission's concept is to protect investors, but it has produced the opposite effect. The government's consultation paper mentions transitional arrangements, allowing companies with substantial operations in Hong Kong to apply for licenses before June 1 and continue operating during a 12-month transition period. The Securities and Futures Commission will assess compliance during the transition period and issue licenses automatically in June of the following year if the criteria are met.
