Following Hong Kong’s decision to implement a new “Virtual Asset Service Provider License” system in June, the Hong Kong Financial Management Bureau is set to prohibit the usage of “Algo Stablecoin.” Additionally, Sun Yuchen has announced plans to “move to Hong Kong” in order to lead China’s next bull market of cryptocurrencies.
Hong Kong Sets Course to Become Crypto Haven
Hong Kong is set to become the most crypto-friendly city in the world as the Hong Kong Securities Regulatory Commission moves to launch a licensing system for virtual asset service providers (VASP) on June 1. The proposed system has been several years in the making and has gone through multiple regulatory processes to ensure the system is compliant with international anti-money laundering and counter-terrorist financing standards.
The move by the Hong Kong government follows an announcement from the city’s Financial Services and the Treasury Bureau in December last year, that the licensing system for VASPs would be postponed until June 1 of this year. This means that those engaged in operating a virtual asset exchange business will soon be able to apply to the Hong Kong Securities Regulatory Commission to apply for a VASP license.
The move is significant in that it could potentially open the door to retail investors participating in cryptocurrency transactions. Currently, the only two cryptocurrency trading platforms in Hong Kong are OSL DIGITAL Securities Limited and Hash Blockchain Limited, which will have to transition into a new regulatory system within the prescribed transition period.
The Hong Kong government is hoping that “Brand Hong Kong” will become a global leader in virtual asset services as investors will soon be able to trade virtual assets in the city under the well-regulated and sustainable regulatory system.
In January, Chen Maobo, the director of the Hong Kong Financial Secretary, stated at the Power Hong Kong Web3 Innovator Summit that the new VASP system will provide a certain degree of market recognition for virtual asset exchanges.
However, not everyone is entirely convinced that the proposed June 1 start date will be beneficial to Hong Kong’s crypto industry.
Leo Weese, co-founder of the Bitcoin Association of Hong Kong, believes that due to the small size of the local crypto market, platforms operated outside of Hong Kong will have little incentive to incorporate in Hong Kong and go through the strict licensing requirements.
Despite these concerns, the prospect of Hong Kong becoming a crypto haven has been greeted with enthusiasm by investors around the world. In February, Justin Sun, founder of the Tron blockchain and the man who runs the Huobi crypto exchange, announced in a tweet that Huobi would apply for a VASP license in Hong Kong.
Sun is also optimistic about the prospect of Hong Kong becoming a major crypto hub in Asia, saying that as China sees Hong Kong as one of the experiment zones for cryptocurrency, he has “confidence Huobi will secure the license”.
The entry of Huobi, alongside OKEx, into the Hong Kong market could give the city a real advantage in the global cryptocurrency sector. Asia’s capital could be a driving force for the next bull run for the crypto market, as Sun confidently predicts.
The launch of the VASP licensing system in June is likely to be closely watched to see whether it delivers a new dawn for the cryptocurrency sector and vault Hong Kong to the top of the virtual asset world.