Representatives of the Hong Kong cryptocurrency industry are trying to reverse an upcoming law that would restrict legal cryptocurrency trading to professional investors, resulting in 93% of locals being excluded from the market.
In comments to the South China Morning Post published on February 15, Global Digital Finance, the industry authority, warned that the proposed law is likely to push retailers to adopt unregulated platforms. Global Digital Finance represents cryptocurrency exchanges such as BitMEX, Huobi, Coinbase, and OKCoin, and has been at the forefront of the industry’s efforts to resist upcoming legislation.
Hong Kong Financial Services and the Treasury Office first published the proposal in November 2020, as part of an effort to tighten measures to combat money laundering and terrorist financing. This step is in line with efforts to bring local regulations in line with recommendations issued by the Financial Action Task Force or FATF.
However, the office’s proposal goes beyond the requirements of the FATF framework, echoing instead the hawkish stance on trading cryptocurrencies in mainland China. Global Digital Finance’s advisory board chair Malcolm Wright noted that FATF members, Singapore, the United Kingdom and the United States, continue to allow retailers to participate in the cryptocurrency market.
Throughout January, the government was consulting with members of both public and industry bodies. Now that the consultation period has ended, the proposal is expected to turn into a bill and be submitted to Hong Kong’s Legislative Assembly later in the year. The South China Morning Post estimate is based on that 93% of locals will be affected by the ban, based on a recent survey by CitiBank that found nearly 7% – 504,000 individuals – had enough assets to meet a minimum for professional investors.
A representative from the Bitcoin Society in Hong Kong recently argued that “restricting retail individuals from accessing Bitcoin would exceed the government’s goals of promoting innovation and financial inclusion.” The proposed restrictions could also extend to Bitcoin automated teller machines, or ATMs, and would greatly expand the jurisdiction of Hong Kong’s existing crypto licensing rules for companies.