Hong Kong Opens Crypto Floodgates to Global Capital

Key Notes

• The SFC plans to allow local crypto platforms to share global order books.
• More liquidity will enter the Hong Kong market with this move.
• The shift also aligns crypto trading practices with more traditional asset-trading frameworks used in Hong Kong.

Hong Kong’s Securities and Futures Commission hinted at easing restrictions and encouraging cryptocurrency trading with its new plans.

The city’s top market regulator will allow locally licensed virtual-asset trading platforms, also known as VATPs, to share global order books with their overseas affiliates, according to a Bloomberg report on Monday, Nov. 3.

Previously, these platforms had to keep their order books isolated from the global market. For example, trades in Hong Kong could only match with other trades in Hong Kong, not overseas platforms.

This change allows more liquidity, from more buyers and sellers, by tapping international pools. Consequently, it will bring better pricing for the traders and more activity for crypto in Hong Kong.

Supercharged Crypto Liquidity?

Allowing access to global liquidity shows that Hong Kong is pushing to compete with other crypto and fintech hubs like Singapore and the United States for digital-asset business.

However, there is still uncertainty around the SFC’s move. The regulator still hasn’t clearly announced when the new rules will take place. With the current info, licensed platforms cannot prepare for an immediate transition due to unclear regulation, like whether retail investors can use it, or the SFC just hinted at large investors.

In August, the SFC also tightened its crypto custody rules for VATPs with strict expectations, Coinspeaker reported.

On the other hand, more than 40 companies have shown strong interest in Hong Kong’s stablecoin license in July. The applications came while the SFC claimed that the platforms must meet strict requirements.

As Hong Kong eases its policy on crypto trading, it may attract more firms into the Hong Kong market, boosting the local crypto ecosystem and possibly increasing competition, innovation, but also regulatory oversight.

Although the move is positive, it doesn’t mean the rules are loosened entirely. For instance, platforms still need valid licenses from the SFC, adhere to AML/KYC, and other regulatory frameworks.

Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.

Cryptocurrency News, News