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- Hong Kong enters the regulation market with licensing mandatories placed on crypto exchanges throughout the country
- A tumultuous week concludes for digital currencies with regulations placed by yet another watchdog in another far off land
- Regulations to a certain extent should not be harmful as it promotes a healthy and safer investing environment
Hong Kong joins the list of countries to have placed restrictions on cryptocurrencies and their definitive usage. It voiced concerns similar to China and set a floor investment amount required to invest in digital assets. Crypto exchanges in Hong Kong will now have to take a license from the markets’ watchdog Securities and Futures Commission (SFC) to carry out operations in the country. Furthermore, investors with a corpus of HK$8 will be counted as professional investors who can trade digital assets. However, the rule has been tweaked to only the initial stages of investing.
Bitcoin collapse triggered by one regulation after another
After a strict ban placed by China on mining and trading activities related to digital currencies, Hong Kong has tightened its belt around the same. Until today, cryptocurrency exchanges had the option to create a license for themselves, but now policies have changed. The committee came up with a new set of rules and regulations to bolster hope and safeguard the public interest.
Moreover, the committee brought a consultation period that lasted from November 2020 to January 2021. It deems fit to place such regulations as a topsy turvy week was capped off where $600 million is already wiped off.
Tension eclipses as regulations come into effect immediately
Hong Kong just rubbed salt on the wound that was deep and traumatic. The SFC now has powers to regulate virtual assets service providers (VASPs) from potential misconduct towards retail investors. Panic-stricken investors continue selling sprees as small retail investors are booking profits at various levels and exiting the market.
On the other hand, exchanges have shown their disapproval, stating that it will lead to other malicious practices out of their control. They feel investors should not be tied to the ground for their choice of investment vehicle. Awareness should be created about the pitfalls but binding them to law is detrimental to their rights.
More the regulations better the game
It is proven that under surveillance, people tend to be more efficient and resourceful. The same can be applied to cryptocurrency markets and exchanges where a certain degree of regulation is required to prevent fraudulent activities. It places the interests of small investors above the markets and its notorious activities. The regulations will enhance the duties of companies that run the exchanges and offer the products to investors.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
