Hong Kong sets up subcommittee to examine crypto legislation
Cryptocurrencies have made their mark on the fintech sector in several countries, but have faced regulatory challenges due to the associated risks and volatile nature of the crypto market. Hong Kong is the latest to join the list of Asian regions accelerating their efforts to establish a regulatory framework to oversee the crypto sector. The HKSAR Legislative Council announced the formation of a new subcommittee over the weekend, which will dedicate its time to drafting detailed crypto laws.
Hong Kong aims to become crypto hotspot
Hong Kong authorities have prioritized making the region lucrative for Web3 companies. Despite the financial risks associated with digital assets, the crypto market is currently worth $2.26 trillion (approximately Rs. 1,88,68,265 crore).
HKSAR member Johnny NG Kit-Chong went to X to announce the establishment of the crypto-focused subcommittee. In his message, Kit-Chong revealed that the subcommittee will examine regulations from two perspectives: one related to Web3 policy and the other related to virtual assets.
From a Web3 policy perspective, the subcommittee is tasked with balancing the growth of Web3 within a regulatory framework. The artificial intelligence (AI) sector will also be promoted by this newly formed body.
Meanwhile, policies surrounding virtual assets will focus on protecting investors and consumers, which could lead to a boost in market confidence.
Other responsibilities assigned to the subcommittee, according to Kit-Chong, include assessing “potential application scenarios and risks of stablecoins in Hong Kong, and regulatory systems that ensure financial stability without stifling innovation.”
The agency will also spend time examining the demand for professional custody services as a result of the rise of virtual assets in Hong Kong and conducting research into related custody practices and regulatory measures.
The committee members also ask for recommendations from the public that they believe could help them oversee Web3 elements such as decentralized autonomous organizations (DAOs).
“I am open to suggestions from the global Web3 industry. I will study them in detail and summarize them to present to the government through the Legislative Council platform,” said the HKSAR Legislative Council member.
What is Hong Kong’s position on crypto?
Hong Kong allows trading and holding of cryptocurrencies, but no cryptocurrencies are recognized as legal tender there. Crypto activities involving individual investors are not subject to tax, but companies engaged in professional crypto activities are subject to income tax.
From Triple-a.ioCurrently, more than 2.45 lakh people, or 3.27 percent of Hong Kong’s total population, own cryptocurrencies.
Last month, Hong Kong’s Securities and Futures Commission (SFC) announced that it would conduct priority checks to ensure all crypto exchanges were complying with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).
Earlier in April, Hong Kong, like the US, approved ETFs tied to Bitcoin and Ether, in a bid to increase institutional investor involvement in the otherwise risky digital asset.
