- Hong Kong's separate markets make it the perfect testing ground for China
- The watchdog mandates a due diligence process on all coins before they are listed
The government in mainland China might support the idea of Hong Kong legalizing a form of retail crypto trading as the administrative region gets ready for the respective consultation process, Bloomberg reported.
According to the leading medium, crypto-themed meetings in Hong Kong attract officials from China’s Liaison Office, who maintain a friendly tone during follow-up calls as well.
A testing ground
Insiders report that Hong Kong has always wanted to become a crypto hub in that part of the world and its separate markets and judicial system make it the perfect testing ground for China.
This is part of their tradition: mainland China used Hong Kong to test the open markets theory in the 20th century. Nick Chan, a crypto lawyer and member of the National People’s Congress of China, said:
As long as one doesn’t violate the bottom line, to not threaten financial stability in China, Hong Kong is free to explore its own pursuit under One Country, Two Systems.
Virtual asset providers to offer retail trading
The Securities and Futures Commission (SFC) of Hong Kong made its first move to endorse retail crypto trading, starting a consulting process for providers of virtual asset services who want a license to offer retail trading services as well.
However, they need to fulfill the SFC’s requirements first. These include a due diligence process on all coins before they are listed. Only pre-approved digital assets will be available for trading. In addition, providers must set up a risk profile for customers to make sure their exposure is not excessive.
Hong Kong introduced a bill to legalize crypto trading last year. The SFC recently closed lengthy negotiations and consultations with the outcome that crypto exchanges can work with professional investors after June 1. These are defined as individuals with a net worth of over $1 million.
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