Hong Kong Drafts Law Restricting Crypto Access to Only Millionaires
Regulators all over the world are stiffening their rules on cryptocurrencies as the market has grown too large to ignore. Hong Kong, a worldwide crypto and financial center, is the newest to call for further regulation of the sector.
Its most recent bill, for example, would limit crypto trading to large investors. Since November of last year, Hong Kong has been holding meetings on cryptocurrency regulations.
The Financial Services and Treasury Bureau of the zone has released the results of its discussions, and they are not favorable to retail cryptocurrency traders.
According to Reuters, the FSTB prefers this sector to be limited to accredited investors. To be considered a qualified investor in Hong Kong, you must have an investment portfolio worth more than HK$8 million ($1.03 million).
If the region passes this legislation, retail traders will be entirely cut out of the market. This will be a major setback for a sector that was built on the idea of decentralizing control, especially in the financial services arena.
The FTSB said, “At least for the early phase of the licensing system, restricting the activities of a VA (virtual assets) exchange to accredited investors is sufficient.”
The regulator desires to fasten its regulation of exchanges in addition to restricting retail traders. Presently, exchanges in the area are only required to send information to the watchdog on a voluntary basis. The FTSB, on the other hand, wants the Securities and Futures Commission to have more control over the cryptocurrency exchanges.
Asley Alder, the CEO of the SFC pointed out in a speech:
“This is a significant limitation, as under the current legislative framework if a platform operator is really determined to operate completely off the regulatory radar it can do so simply by ensuring that its traded crypto assets are not within the legal definition of a security.”
The regulators plan to present the draft regulations to lawmakers as soon as possible in order for them to become law. Accepted, there is a need for more regulation of exchanges. It would be easier to draw institutional investors if the business is more monitored. This legislation would also help to prevent cheating in the emerging sector.
The moratorium on retail traders, on the other hand, could cause a lot of problems. For instance, it will bar a whopping 93% of Hong Kong citizens from investing in cryptocurrency. According to the South China Morning Post, approximately 504,000 residents had assets worth more than $1 million.
In an area with a population of nearly 7.4 million citizens, this shows that a large percentage of locals would be unable to invest in cryptocurrency.
Leo Weese, the founder of the Bitcoin Association of Hong Kong summed it up:
“To restrict retail individuals from accessing Bitcoin would be overshooting the government’s goals of promoting innovation, and financial inclusion.”