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Hong Kong’s regulatory heat forces crypto exchange FTX to move

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Hong Kong’s latest regulatory turnover has caused an array of platforms to flee from the region. Prominent cryptocurrency exchange, FTX was the latest to move away.

This year was all about regulations in the crypto-verse. Even though the crypto market started out to steer away from the harsh regulatory system put forth by centralized entities, the digital asset market succumbed to this regulative society. Just as the value of the market began surging, regulators across the globe started taking a keen interest in the industry. This further pushed several crypto platforms to shut shop or even turn into a centralized firm.

Hong Kong was one such region that began overseeing its crypto scene. With newly established regulations, crypto platforms in the region were obligated to abide by it or close shop. Crypto derivative platform, FTX took another route and decided to relocate from HK.

Hong Kong bids adieu to FTX

In a recent tweet, Colin Wu Chinese crypto-journalist revealed that FTX had shifted its headquarters from Hong Kong to Nassau in the Bahamas. The tweet read,

This moe was directly linked to the harsh regulatory climate in the region. Nassau which is the capital of the Bahamas is reportedly more crypto-friendly and the chances of FTX thriving in the Bahamas was higher.

Just a couple of days ago, the crypto exchange noted that its subsidiary, FTX Digital Markets had garnered a registration from the Securities and Exchange Commission of the region. Not only did this open the doors for new opportunities but it also paves the way for the crypto platform’s growth.

Ryan Salame was appointed as FTX Digital Markets’ CEO. Salame was previously serving as the Head of OTC at Alameda Research. Speaking about this shift and his new position, Salame said,

“I’m excited to plant the flag for FTX in The Bahamas. The relationship we have fostered with local regulators culminating with us being authorized under the framework offered through the DARE Act, gives me confidence that we’ll be able to work closely with regulators to make sure our offerings are compliant in multiple jurisdictions.”

Crypto firm enters into lease agreement with Hong Kong’s biggest landlord

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Cryptocurrencies have certainly taken the world by storm. Despite cutting off ties with the dark web, regulatory systems from across the globe continue to haunt the industry. Even though the entire crypto industry was started to steer away from the shackles of centralized systems, the crypto market, unfortunately, found its way into extreme scrutiny. While garnering approval from a regulatory entity has become a must in the current world, cryptocurrency exchanges were seen grappling.

Similar to an array of governments across the globe, Hong Kong decided to jump onto the regulatory train and scrutinize the crypto-verse. After making it mandatory for digital asset exchanges functioning in the region to have a proper license, several firms were seen bidding adieu. However, a few others stuck around and managed to garner a license.

A firm called HashKey Group made news after amassing a license as well as a prominent property in Asia’s financial hub.

Crypto continues to boom in Hong Kong

Hong Kong’s major property landlord, Hongkong Land revealed that it had entered a lease agreement with HashKey Group, a local digital asset firm. This move comes after the financial watchdogs of Hong Kong clarified regulations surrounding crypto in the region.

Hongkong Land has leased out a commercial office space for the digital asset firm. An entire floor will be used by the firm in the Three Exchange Square. The executive president at HashKey, Michel Lee noted that the Three Exchange Square was one among the “most prestigious office buildings” in the region. This deal has reportedly put the firm right at the “center of the business community.”

Speaking about the latest lease agreement, the director and head of office, commercial property at Hongkong Land, Neil Anderson said,

“The SFC’s recent decision to regulate digital asset exchanges in Hong Kong gives us confidence that this new asset class has a regulatory framework, and therefore a future within the finance industry,”

Binance closes its crypto derivatives doors for its new Hong Kong users

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Binance has been a regular visitor of the headlines. The increased pressure from regulators from across the globe has left the exchange gasping for a breath of fresh air. Seems like the regulatory pressure was getting to the platform as it was shutting down services in various parts of the globe. Hong Kong became the latest region to behold Binance’s fallout with financial watchdogs.

The Changpeng Zhao-led crypto exchange managed to stay on top despite being fairly new to the market. The constant updates, partnerships, expansion, and CZ’s marketing skills put the exchange on a pedestal. This hot streak of the exchange was interrupted by regulators of different regions across the globe.

Not too long ago, the Securities and Futures Commission on Hong Kong noted how the platform wasn’t licensed to carry out crypto-related activities in the region. Binance has been facing similar issues with regulators from Japan, Ontario as well as the Cayman Islands.

Binance imposes crypto derivatives restrictions on Hong Kong users

In a recent tweet, CEO Changpeng Zhao revealed how new crypto exchange users would be prohibited from accessing the futures accounts. The tweet read,

Further information was provided by the exchange on its blog post. In the post, the exchange noted that users from Hong Kong would no longer be allowed to open up new derivatives accounts. While the date was yet to be announced, users would be allowed a grace period of about 90 days to close their open positions.

The crypto exchange further wrote,

“As the market leader, Binance constantly evaluates its product and service offerings. We will be restricting Hong Kong users in respect of derivatives products (including all futures, options, margin products and leveraged tokens) in-line with our commitment to compliance. Binance will be the first major cryptocurrency and digital assets exchange to proactively restrict access to derivatives products to Hong Kong users.”

Hong Kong authorities crackdown $155M money laundering ring

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Hong Kong Customs has reportedly put a stop to a significant money-laundering syndicate that involved the use of cryptocurrency.

Criminals have started to venture into the digital world, taking advantage of the fact that the crypto industry isn’t entirely regulated. However, authorities from across the globe have stepped up their game and made arrangements to deal with crimes involving the crypto industry. Hong Kong’s customs was one of them as they managed to disassemble a money-laundering syndicate that carried out a $155 million transfer.

The South China Post revealed that the police captured four men between the age of 24 and 33 for the same. This list included the leader of the syndicate along with the others that helped him out.

Hong Kong encounters its first crypto money laundering case

The money-laundering syndicate was reportedly started back in February 2020 and functioned all the way up to May 2021. A total of HK 1.2 billion had been illegally transferred through different bank accounts. About 60% of the funds were sent through bank accounts in Singapore.

The transaction pattern of the ring leader was what raised suspicion, which further instigated the investigation. Noting how this case was the first of its kind in the city, the Senior Superintendent Mark Woo Wai-kwan of customs’ syndicate crimes investigation bureau stated,

“It is the first time in Hong Kong that a money-laundering ring involved in using cryptocurrency to wash dirty cash and conceal the source of criminal assets was broken up.”

Furthermore, it was noted that those involved in the”Coin Breaker” case were employing the world’s largest stablecoin, Tether [USDT], to launder most of their funds. Around 40 wallets associated with the money laundering ring were found by the authorities during the investigation.

No cryptocurrency exchange’s name surfaced. The authorities hadn’t revealed what crypto platform was processing the illegal transactions carried out by the money laundering syndicate.

Hong Kong discusses CBDC in its Fintech strategy report

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Hong Kong has been in the news lately over its recent change in crypto regulations. While the city seems to be carefully regulating the crypto-verse, it did not shy away from embracing central bank digital currencies [CBDC].

CBDCs emerged as a great interest to many governments across the globe. The potentials of these assets lured many in, however, China’s progress in the same coerced several countries to explore the digital world. As the adoption and dominance of these yet-to-be-released assets were inevitable, every region from around the world began preparing to accommodate CBDCs. Hong Kong seemed to be the latest region to jump onto the CBDC bandwagon. The city’s financial regulator,  Hong Kong Monetary Authority [HKMA] portrayed its plunge in digitalization in its recent report titled, “Fintech 2025”.

Hong Kong’s leap towards digitalization

In this report, HKMA pointed out that the city hopes to render the comprehensive adoption of cryptocurrency by 2025. The regulator hopes to achieve this via five major steps. This further required all the banks in the region to embrace financial technology.

With regard to CBDC, the regulators intend to “future-proof” the city for CBDCs. The report revealed that HKMA would bolster its research in the field of CBDC in order to issue the same at wholesale as well as retail levels. The report further read,

“In addition to the continued effort on wholesale CBDCs, the HKMA has been working with the Bank for International Settlements (BIS) Innovation Hub Hong Kong Centre to research retail CBDCs and will begin a study on e-HKD to understand its use cases, benefits, and related risks. The HKMA will also continue to collaborate with the People’s Bank of China in supporting the technical testing of e-CNY in Hong Kong with a view to providing a convenient means of cross-boundary payments for both domestic and mainland residents.”

China’s advancement in the field of CBDC has caused fear among many regions. However, China seemed to be joining forces with Hong Kong with respect to CBDC. The world’s most populous country even took the digital yuan to Hong Kong in order to test it for cross-border payments.

Furthermore, HKMA’s list included the formulation of next-gen data infrastructure, expansion of fintech savvy workforce, and funding and policymaking that nurtures the ecosystem.

Hong Kong official endorses government’s conditional crypto regulation

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While several regions across the globe were seen rolling out revised laws in order to address the emerging crypto industry, Hong Kong was seen taking a different path.

Previously, the Hong Kong government revealed that it wouldn’t ban crypto trading, but would limit it to “professional investors”. This law restricted the trading of digital assets to those whose portfolios consisted of a minimum of HK$8 million. Speaking about the same, the Financial Services and the Treasury Bureau [FSTB] of the city suggested that this change was “appropriate at least for the initial stage of the licensing regime.”

More recently, the Secretary of the FSTB, Christopher Hui detailed why the latest regulatory measure was important.

Hong Kong’s controversial crypto law

FSTB’s Secretary Hui recently spoke at the StartmeupHK virtual fintech summit and went on to address the financial regulator’s latest move. While the city did not outrightly ban the trading of crypto, it went on to restrict it to professional traders only. While this excluded the majority of the city’s population, Hui went on to say that this law was necessary to secure investors while also expediting progress. Hui said,

“We are of the view that a proper regulatory system could facilitate development and at the same time protect investors and adhere to international regulatory standards.”

The evolution of the crypto market stunned many. With some pocketing billions, the fan base of the crypto-verse continued to escalate.The volatile nature of the crypto industry, on the other hand, has stood out, causing even more fear among people. As governments rush to protect people from enduring major losses, Hong Kong was paved a new path.

Elaborating on the same, Hui said in his speech,

“Imposing mandatory requirements to protect investors, prohibit market manipulation, and guard against money laundering and terrorist financing, we believe the proposed regime will further facilitate development of the virtual assets industry in Hong Kong, leveraging our world-class regulatory framework.”

Hong Kong citizens have to be “professional investors” to use licensed crypto exchanges

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Several regions across the world have been embracing crypto after its five-fold surge. Hong Kong, however, has limited the trading of crypto to professional investors.

While the crypto-verse started out as a market free from the shackles of governments across the world, its constant association with the dark web forced authorities to intervene. Despite this, the crypto-verse is considered a decentralized system free to all. This appears to be changing with time as several governments have started to ban the trading of digital assets while outrightly calling them a sham.

Hong Kong seems to have joined this list with its latest announcement. However, the region is doing things a little differently. In its latest report, Reuters revealed that not all citizens of Hong Kong would be allowed to trade or use a cryptocurrency exchange. The services offered by any licensed crypto platform in Hong Kong would be confined to professional traders only.

Hong Kong upgrades its crypto laws

The aforementioned laws reportedly came into notice in the government proposals that were published today. The volatile nature of the crypto-verse has made several billionaires while destroying the savings/ investments of many others. Authorities across the globe have been striving to protect their citizens from enduring any major loss through crypto. Hong Kong seemed to be doing the same by restricting its citizens from using these assets.

As per the city’s law, a person would be considered a professional investor only if his/her/ their portfolio consists of $1.03 million or HK$8 million. Hong Kong’s Financial Services and the Treasury Bureau [FSTB] stated,

“[…] confining the services of a VA exchange to professional investors…. is appropriate at least for the initial stage of the licensing regime.”

Additionally, prominent Chinese new portal, 8BTC pointed out the importance of getting a crypto exchange licensed in the city. The platform tweeted,

Furthermore, noting the repercussions of failing to do so, 8BTC added,

“Carrying out regulated virtual asset activities without a license is liable to a fine of HK$5 million and imprisonment for seven years; And, in the case of a continuing offense, a further fine of HK$100,000 for each day during which the offense was continued.”

China Takes Digital Yuan To Hong Kong For A Cross-Border Pilot

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China has been spearheading the entire central bank digital currency [CBDC] game. The Covid-19 pandemic enhanced the importance of digitalization as a mere human touch had the ability to cause death. While several countries despise cryptocurrencies they still decided to go ahead with a central bank digital currency.

While the world fears that China could garner financial and technological dominance over the globe, several countries have been forced to fasten the pace in the development of their respective CBDC. Japan recently revealed that it would soon roll out Phase 1 of its CBDC pilot. Just when all the regions are prepping for the launch of this digital asset, China revealed that it had conducted its first cross-border pilot of its CBDC.

China’s Digital Yuan Moves Ahead With Full Force

As per a recent report from a local news platform, Sina Finance China has taken the digital yuan to Hong Kong to explore the cross-border aspect. The Chinese central bank, People’s Bank of China’s [PBoC] digital currency research bureau’s director, Wang Xin revealed that a couple of technical tests were done to review the cross-border phase of the Chinese digital currency.

Wang Xin reportedly made this announcement at the State Council Information Office of China hosted a press conference earlier this week. During this event, the official pointed out that the PBoC had joined hands with the Hong Kong Monetary Authority for this pilot.

Additionally, several platforms across the country have been testing the digital yuan. Recently, the country had given the public a chance to test the digital yuan. Several shoppers reportedly carried out over a thousand transactions during the Women’s day weekend.

Speaking about the emergence of CBDCs, Wang Xin told CNBC,

“On one hand, this is related to more and more central banks in the world participating in the development of domestic digital currencies. On the other hand, this (interest) may also be related to the large increase in the price of bitcoin.”

Hong Kong Regulators Give Fidelity-Backed Digital Asset Platform A Green Signal

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Seeking approval from financial regulators has become one of the biggest problems of the crypto industry. Hong Kong has been working towards regulating crypto platforms and even put in place laws to keep them in check. As a result of this, the crypto platforms operating in Hong Kong are mandated to have a license.  Abiding by these laws, a prominent digital asset firm, OSL had previously sought a license from the Securities and Futures Commission of Hong Kong.

Hong Kong Mandates The Need Of License For Crypto Platforms

In a recent announcement, OSL revealed that it would deliver its digital asset services to the corridors of Hong Kong. The platform is a part of BC Group which is backed by Fidelity. The Securities and Futures Commission [SFC] got an application for a license from OSL back in November and was the first to apply for a crypto license in the region. While the SFC gave the platform a thumbs-up back in August 2020, OSL reportedly brushed up on all the requirements that the SFC had asked for.

With this license, OSL can deliver an array of digital asset-related services to the citizens of Hong Kong. The platform is all set to open up trading for prominent cryptocurrencies like Bitcoin [BTC], Ethereum [ETH] along with several other assets. OSL Digital Securities will also allow users to avail select security token offerings [STOs].

The world seems to be coming to terms with the fact that the institutional interest has been zooming towards Bitcoin and other assets. Elaborating on the same, Wayne Trench, the CEO of OSL said,

“Institutions, and other professional investors, including HNWIs and family offices, can now trade digital assets with the region’s most comprehensive and trusted digital asset platform in OSL. Because the framework is under the auspices of a leading global regulator and modeled after existing licensing for financial services, clients can trade with confidence under the protections and safeguards to which they are accustomed.”

Regulators have been upping their game following the emergence of a number of crypto platforms. Digital asset platforms are making sure to comply with the laws put forth by regulators across the globe. OSL went a step ahead as the digital asset platform revealed that it had applied for a digital asset license under the Payments Services Act from the Monetary Authority of Singapore [MAS].

The latest license acquired by the OSL from the SFC makes the digital asset platform the first firm to attain a license from the SFC.

Fintech Gets Another Boost from China as Standard Chartered Completes Cross-Blockchain Trade with Hong Kong

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Blockchain solutions have taken the world by storm over the past couple of years with multiple integrations with several sectors. Organizations were not the only ones utilizing the technology as state governments have also taken a keen liking to the not-so-niche industry.

China is one of the major regions taking a deep dive into the technology with multiple areas testing out different versions of blockchain. Recently, Standard Chartered Bank announced the completion of a cross-block transaction between Hong Kong and China, marking a major step forward in the area.

The original transaction was conducted between the People’s Bank of China Trade Finance Platform in China and the eTradeConnect platform in Hong Kong. Earlier releases had pointed to the usage of the digital Yuan for this very same purpose but there was no mention about it in the latest move. China’s lean towards a digital yuan made massive headlines in 2019 as it made the first P5 country to adopt blockchain wholeheartedly.

Hong Kong Monetary Authority Executive Director Colin Pou claimed that the adoption of new technologies would make large scale transactions much more seamless and safer. He added:

“The Proof-of-Concept trial (PoC) that connects eTradeConnect and the PBCTFP aims to provide importers and exporters in both places with more convenient trade finance services.”

Standard Chartered’s experience in the blockchain industry can be traced back to the formation of the seven bank association testing cross border transactions. The other members who participated in the fund transfer were the ICBC, Bank of China, and Bank of Communications (including Hong Kong subsidiaries). China’s increased focus on the blockchain has also forced other countries to sit up and take notice of the newly burgeoning industry. The Red Dragon had previously conducted internal tests within Guangdong, Macau, and Hong Kong.

Hong Kong and China began work on blockchain solutions over a year ago while creating a framework for Central bank Digital Currency [CBDC]. The eTradeConnect partnership is operated by Chinese firm Oneconnect with the intention of scaling the blockchain usage. There are also plans to expand the platform utilities to regions such as Europe and the rest of the Asian market.