Hong Kong is introducing a new policy to regulate cryptocurrencies from June 1. Individuals wishing to trade in virtual assets are now allowed to do so. Hong Kong is thus becoming the cryptocurrency centre of Asia.
Christopher Huai, Hong Kong's minister of financial services and treasury, said that even though there are potential risks, digital currencies still have significant value. He also added that regulations on cryptocurrencies are being created all over the world, and Hong Kong is no exception.
Despite the move, police reported that cryptocurrency-related fraud in the city increased last year, with victims suffering losses of HK$1.7 billion (US$217 million). Despite this, authorities still decided to open cryptocurrency trading to retail investors.
Retail investors will be able to buy and sell bitcoin and other digital assets if they comply with security rules. At least two indexes must consist of cryptocurrencies. Prohibited services, such as cryptocurrency lending, digital money advertising and proprietary trading, are strictly prohibited. Crypto platforms must use third-party custodial services to store assets.
Hong Kong will accept cryptocurrency companies and exchanges in the country that are willing to comply with existing regulations and are willing to support them in any way possible. Furthermore, the US dollar-linked FDUSD stablecoin will be launched; the stablecoin will only be regulated in Asia.
Hong Kong-based trust company First Digital Group recently announced the launch of its own FDUSD stablecoin. Negotiations are currently underway with the most important exchanges for its listing.
According to First Digital, FDUSD is backed by "high-quality reserves'' consisting of cash and cash equivalents held at regulated financial institutions across Asia and will be issued by First Digital Trust, a trust company registered under the Hong Kong Trust Ordinance. However, it will not be available to retail customers in Hong Kong until further notice, as Hong Kong regulators have previously indicated that stablecoins should not be open for trading by retail investors until regulations relating to this particular asset class are formally adopted.
