Participants in the cryptocurrency industry in Hong Kong have tried to oppose an upcoming law that will restrict the legal trade in cryptocurrencies for professional investors by blocking market access for 93% of the local population.
In comments to the South China Morning Post published on February 15, the industry association Global Digital Finance warned that the proposed law is likely to pressure retailers to use unregulated platforms. Global Digital Finance represents cryptocurrency exchanges such as BitMEX, Huobi, Coinbase and OKCoin, and they are at the forefront of the industry’s efforts to counteract future legislation.
Hong Kong’s Ministry of Finance and Financial Services first published a proposal in November 2020 as part of an effort to tighten measures to combat money laundering and terrorist financing. This step is in line with the work of adapting national legislation to the recommendations of the Financial Action Task Force (FATF).
However, the Office’s proposal goes beyond the requirements of the FATF structure, and instead reflects a tough stance on cryptocurrency trading in China. Global Digital Finance Advisory Board Chair Malcolm Wright noted that FATF Singapore, UK and US members continue to allow traders to participate in the cryptocurrency market.
During January, the government consulted both the public and industry. Now that the consultation period has ended, the proposal is expected to be translated into law and presented to the Hong Kong Legislative Assembly at the end of the year. The South China Morning Post estimates that 93% of the country’s population will be affected by the ban, based on a recent CitiBank survey which found that almost 7% – 504,000 people – had enough assets to meet the minimum for professional investors.
A spokesman for the Bitcoin Society in Hong Kong recently said: “Restricting retail access to bitcoin will exceed the government’s goal of promoting innovation and affordable prices.” The proposed restrictions may also apply to Bitcoin ATMs or automated teller machines, and will extend the scope of existing licensing rules for cryptocurrency licenses in Hong Kong.