HONG KONG will start a consultation on legalizing crypto trading by retail investors as it seeks to create a hub for digital tokens under a wider push to restore the city’s credentials as a financial centre.
Years of political turmoil and Covid curbs sparked a talent exodus from Hong Kong, undermining the city’s claim to be Asia’s financial nerve centre. Officials are now trying to undo some of that damage by wooing businesses back, though it remains an open question how successful they will be.
Hong Kong will be careful and cautious about the risks to retail investors and will enhance education and ensure appropriate regulatory arrangements are in place.
A consistent framework for crypto regulation is essential and key to growing institutional and retail adoption of digital assets at scale.
Tokenisation refers to the process of using blockchain technology to create tradable tokens that could represent a range of assets or fractions of them. Smart contracts, key to decentralized finance applications in crypto, are software programmes that automatically execute when certain conditions are met.
Regulators globally are grappling with how to oversee the volatile digital-asset sector, which is picking up the pieces of a US$2 trillion rout over roughly the past year. The shakeout may lead to a reordering of crypto markets in Asia.
Digital-token transaction volume in Hong Kong expanded less than 10 per cent in the 12 months through June from a year earlier, the least in East Asia outside of a slump in China.