June 10, 2024
By Sharan Kaur Phillora
In a recent address at the Greenwich Economic Forum Hong Kong, Julia Leung, the chief executive of the Hong Kong Securities and Futures Commission (SFC), highlighted Bitcoin’s resilience and its status as an alternative asset. Leung’s remarks come at a pivotal time as Hong Kong’s regulatory landscape for virtual assets undergoes significant changes.
Here’s what we know:
Leung gave a speech on the ongoing debate among central bankers and economists regarding the intrinsic value of virtual assets like Bitcoin and Ethereum. “I do not disagree with this view. While the intrinsic value debate will continue, it is a fact that, 15 years on, Bitcoin has survived multiple cycles of boom and bust, clearly showing its staying power as an alternative asset,” she stated. Leung emphasized that the underlying technology of Bitcoin, Distributed Ledger Technology (DLT), is here to stay.
Her comments coincided with the SFC’s new licensing regime for crypto trading platforms, which mandates that all platforms serving retail investors in Hong Kong must obtain a license. This move has sparked criticism from some quarters, including Hong Kong lawmaker Duncan Chiu, who argued that the “excessively stringent” regulations have deterred major global exchanges from entering the market, thereby dampening investor confidence.
Leung clarified that the SFC’s support for the Web3 ecosystem should not be misconstrued as an endorsement of virtual assets, which she described as highly speculative and prone to extreme price volatility. “Therefore, while meeting investors’ demand, we have made sure that wide-ranging safeguards are in place to protect investors,” she added.
In addition to the licensing regime, the SFC is also working on regulating stablecoins. The Hong Kong Monetary Authority (HKMA) recently completed a consultation on a proposed regime that would require stablecoin issuers to ensure full backing by high-quality and highly-liquid reserve assets. This initiative aims to provide a robust regulatory framework for stablecoins, ensuring their stability and reliability.
Furthermore, the SFC is collaborating with the HKMA on Project Ensemble, a tokenization initiative launched in March 2024. This project aims to explore the potential of a central bank digital currency (CBDC) for Hong Kong, initially focusing on tokenized deposits. A regulatory sandbox will be established to pilot various tokenization use cases, including the trading and settlement of tokenized products like green bonds and carbon credits.
Leung’s recognition of Bitcoin’s staying power highlights the evolving landscape of digital assets and the importance of a balanced regulatory approach that fosters innovation while protecting investors. As Hong Kong navigates these regulatory changes, the city’s position as a global hub for digital assets continues to take shape.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
