- Crypto exchanges are under threat of being sent to unregulated platforms
- Threat generated after a proposed ban on retail crypto traders, in Hong Kong
- Hong Kong’s crypto market is significant for the cryptocurrency industry
- Proposed ban is slightly different from other jurisdictions
Crypto exchanges advocacy group, Global Digital Finance has warned against a proposed ban on retail traders by Hong Kong’s Securities and Future Commission (SFC). The advocacy group represents several top digital assets exchanges such as Coinbase, Huobi, OKCoin, and BitMEX. According to the South China Morning Post, the ban might drive the crypto exchanges towards unregulated platforms. However, the proposed framework is still under public consultation. Indeed, the deadline of the proposal is near until then the legislature can turn that into law.
Hong Kong’s market is significant for crypto exchanges
Hong Kong is the home to several digital assets exchanges and also is one of the preferred jurisdictions to enter the lucrative Asian market. In the market, a large part of the virtual currency traders are under the retail category. According to Citibank’s survey, approximately 5,04,000 individuals in the market constitute that around 7% of the total population are qualified investors.
In November, Hong Kong’s Financial Services and the Treasury Bureau (FSTB) proposed a cryptocurrency regulation framework. Such regulation desires to restrict all retail traders from cryptocurrency trading. Later on, the bureau revealed that the framework is in line with the proposed advice of the Financial Action Task Force (FATF). However, the proposed framework is still under public consultation, and the deadline is not so far. Following the fact, crypto exchanges are concerned that if the government imposes the ban, they will be sent to unregulated platforms.
Ban imposed by Hong Kong is different from other jurisdictions
According to the advocacy group’s Chairman, Malcolm Wright, restricting digital assets trade to only veteran investors is entirely different from other jurisdictions. Other jurisdictions like Singapore, the United Kingdom, and the United States allow retail traders to trade crypto assets. Moreover, the UK is also trying to regulate the cryptocurrency exchanges, and firms also mandated the registration of all operations related to it. Simultaneously, the jurisdiction has also banned the sale of retail derivatives products, instead of allowing spot trading.
However, countries like India and Nigeria are taking more challenging paths by imposing a complete ban on digital assets. According to the exchange body, any hurdle in the place to restrict the sale or purchase of cryptos needs to be reasonable and well justified. Indeed, users need to be able to use and accept digital currencies as payments.
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