Hong Kong is considering fast tracking updates to its cryptocurrency regulations as the sector takes off globally, a sign of a change in policy that needs to match the demand of an expanding industry.
The issue came to the fore at a Legislative Council session today when officials debated the need to adjust the city’s regulatory framework with the fast-changing virtual asset (VA) landscape. The session included a proposal from the government that it should act quickly in tackling these challenges.
Hong Kong Aims to Strengthen Crypto Oversight
Joseph Chan, Acting Secretary for Financial Services and the Treasury, said in a written statement that the virtual asset sector offers opportunity but also ‘complexities to the financial system’. Hong Kong will align with international standards, said Chan, adding that the city plays an important role in shaping VA regulation.
Chan declined to reveal specific timelines or details on the proposed regulatory changes but said Hong Kong played a key role in the regulation and development of virtual assets.
In some cases, legislators have even suggested that a more structured approach may be necessary, including a department devoted to cryptocurrency, a commissioner, or just some other form of oversight for cryptocurrency policies. Other jurisdictions are taking such moves to give clearer regulatory guidance to a sector expanding at lightning speed.
The debate also concerned whether Bitcoin, or other cryptocurrencies should join Hong Kong’s fiscal reserves. While crypto assets are not currently targeted by the city’s Exchange Fund, Chan said minimal involvement could result from external investment managers.
“It cannot be ruled out that there may be investments involving crypto assets during the investment operations of the external managers at different points of time, but the relevant proportion is minimal,” Chan said.
Hong Kong is one of Asia’s major financial hubs, so one of the most watched for stances on cryptocurrency regulations. Balancing its willingness to create and the need to take financial risks is considered vital to its position on the global stage.
This is a testament to the difficulty governments around the world find in cycling through rapidly growing and complex cryptocurrency markets. Whether Hong Kong will create a dedicated crypto oversight body is left to be decided, but the talks tip into a pivot moment for the city on digital assets.
