Crypto industry actors in Hong Kong have been trying to push back against a forthcoming law that would restrict legal cryptocurrency trading to professional investors, locking out 93% of the local population from the market.
In comments to the South China Morning Post published on Feb. 15, industry body Global Digital Finance warned that the proposed law would be likely to push retail traders to embrace unregulated platforms. Global Digital Finance represents cryptocurrency exchanges such as BitMEX, Huobi, Coinbase and OKCoin, and has been at the forefront of industry efforts to push back against the forthcoming legislation.
Hong Kong’s Financial Services and the Treasury Bureau first published the proposal in Nov. 2020, as part of a bid to toughen Anti-Money Laundering and counterterrorist financing measures. The move aligns with efforts to bring domestic regulations into line with recommendations from the Financial Action Task Force, or FATF.
Yet the Bureau’s proposal exceeds the requirements of the FATF’s framework, echoing instead the tough stance towards cryptocurrency trading in mainland China. The chair of Global Digital Finance’s advisory council, Malcolm Wright, has pointed out that FATF members Singapore, the United Kingdom, and the United States all continue to allow retail traders to take part in the cryptocurrency market.
Throughout January, the government has been consulting with both members of the public and industry bodies. Now that the consultation period has come to a close, the proposal is expected to be turned into a bill and introduced to Hong Kong’s legislative council later in the year. South China Morning Post’s estimate that 93% of the domestic population would be affected by the ban is based on a recent CitiBank survey that found that roughly 7% — 504,000 individuals — had enough assets to meet the threshold for professional investors.
A representative from the Bitcoin Association of Hong Kong has recently argued that “to restrict retail individuals from accessing Bitcoin would be overshooting the government’s goals of promoting innovation, and financial inclusion.” The proposed restrictions could also extend to Bitcoin automated teller machines, or ATMs, and will also significantly expand the remit of Hong Kong’s existing crypto licensing rules for businesses.