Hong Kong regulatory policy implementation
1) Issue licenses to virtual asset providers (VASP)
2) The Hong Kong central bank specifically asked institutions to help virtual asset service providers (VASPs) obtain banking services, stating:
“AIs should endeavour to support virtual asset service providers licensed and regulated by the Securities and Futures Commission in meeting their legitimate needs to open bank accounts in Hong Kong.”
3) Chinese state-owned bank registers cryptocurrency company in Hong Kong
Chinese banks are opening bank accounts for regulated crypto companies, with several acting as payment layers for crypto platforms. In addition to Bank of Communications, ZhongAn Bank, Hong Kong's largest virtual bank controlled by Chinese internet insurance company ZhongAn Online Property Insurance, will also serve as a settlement bank for cryptocurrency companies. The banks will jointly facilitate deposits and withdrawals of fiat currencies. In addition to providing account services for cryptocurrency businesses, the banks will also serve as settlement banks, enabling token deposits from authorized exchanges to be withdrawn in Hong Kong dollars, RMB and US dollars.
4) In addition to joining crypto companies and opening bank accounts for regulated companies, the Chinese government-backed CPIC Investment Management has also launched two crypto funds. China Pacific Insurance is the second largest insurance company in mainland China, and its newly launched crypto fund is mainly aimed at institutional investors.
5) Recognize that crypto assets are legal property
Case: In her analysis of the ruling issued by law firm Hogan Lovells, Judge Linda Chan said that cryptocurrencies have the attributes of property. The court found it appropriate to follow the reasoning applied in other jurisdictions, namely that cryptocurrencies are property and can constitute the subject matter of a trust. Chan noted: "Like other common law jurisdictions, our definition of 'property' is inclusive and is intended to have a broad meaning."
According to Hogan Lovells, the new ruling may provide insolvency practitioners in Hong Kong with more clarity when it comes to digital assets. Confirming that cryptocurrencies constitute property similar to other assets such as stocks brings Hong Kong in line with other jurisdictions. At the same time, the court also recognized that cryptocurrencies are property in China.
7) Hong Kong’s Securities and Futures Commission (SFC) will release guidelines on cryptocurrency trading licenses next month.
8) Connections to Beijing: Representatives from the Chinese Liaison Office frequent crypto meetups in Hong Kong to get a feel for what’s going on.
Hong Kong has had friendly outreach to Beijing officials on the matter, and local cryptocurrency business operators believe that Beijing — albeit very subtly — may be willing to use Hong Kong as a test bed for cryptocurrencies.
9) Hong Kong-listed virtual asset exchanges:
Hong Kong’s Securities and Futures Commission has outlined a new crypto licensing regime that proposes that all centralized exchanges operating in the region must be licensed by the regulator.
It also proposed allowing retail traders access to licensed cryptocurrency trading platforms, saying public feedback highlighted that denying access to crypto markets could prompt Hong Kongers to trade on unregulated overseas platforms.
The new regulatory push has prompted many cryptocurrency businesses to seek expansion into the city. Recently, Huobi Global Exchange said it would seek a local license and plans to open a new exchange in Hong Kong, focusing on institutions and high-net-worth individuals.
10) Hong Kong Type 9 License Case: HashKey has obtained a "Type 9 Asset Management License" issued by the Hong Kong Securities and Futures Commission, allowing it to manage an investment portfolio consisting only of virtual assets and potentially paving the way for its latest offering. In its latest announcement, HashKey also noted that "the recent challenges in the crypto market have highlighted the need for deep and reliable liquidity." HashKey has completed a $500 million investment round for a fund that it plans to use to help drive mass adoption of blockchain and crypto technologies.
11) 2 executives of cryptocurrency exchange AAX arrested in Hong Kong Hong Kong police arrested two executives of cryptocurrency exchange AAX, who were charged with fraud and misleading the police. On December 23, Weigao Capital CEO Liang Haoming and former AAX CEO Chen Taian were arrested. Local authorities accused them of delaying customers' asset withdrawals in the event of liquidity problems under the pretext of "system maintenance." Two bank accounts of AAX, as well as the bank accounts and properties of executives, have been frozen.
