Complete Ban on HK Crypto Exchanges Is Unnecessary?

Regulatory changes have been quite harsh for cryptocurrencies this year. In fact, it was the main reason why the market is currently bearish. However, regulations differ from reasonable to unreasonable. There are those countries that are willing to take a closer look at the benefits of blockchain technology, while there are also those that simply want to stop crypto-related activities because of fear of capital flight.

China has imposed a total ban on domestic cryptocurrency exchanges. And recently, malls are now prohibited to host crypto related activities. However, if you are going to ask the outgoing chairman of Hong Kong’s Securities and Futures Commission (SFC), Carlson Tong Ka-Shing he believes that a total ban is unnecessary. Instead, he believes that there should be a formal regulation instead.

According to chairman Carlson Tong Ka-Shing, Hong Kong isn’t going to follow China’s approach to ban the entire crypto sector. He said that “We do not think imposing a total ban on these platforms is necessarily the right approach”. He also added that “Even if we were to ban them, transactions can still be easily conducted via platforms overseas markets”. In fact, it is true that Chinese traders are quite creative when it comes to trading cryptocurrencies.

May Not Qualify As Securities

According to Tong, he stressed that it is possible that cryptocurrencies are not going to fall under the SFC’s Securities and Futures Ordinance. He said that they “may not qualify as securities”. And for this reason, he is suggesting a careful regulatory approach that would oversee the crypto trading platforms. He isn’t exactly the only one with this view of cryptocurrencies. Cryptocurrencies such as Bitcoin and Ethereum have been considered by the US Securities and Exchange as commodities a few months ago.

He also added that “We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue, while at the same time ensuring investors interest are being protected”.

This has been welcomed by different crypto exchanges that are based in Hong Kong. In fact, there are some companies already that are looking to work with regulators. Circle, which has an office in Hong Kong and BitMEX hired a former regulator.

The Hong Kong crypto market has been scrutinized in recent years. In March, ICOs have been targeted by the agency citing “potential unauthorized promotional activities and unlicensed regulated activities”. The following month, the SFC deputy chief July Leung even labeled different ICOs as “dubious, down right frauds”.

Crypto Market Today

Though the crypto market is far from what it was during the start of the year, it seems that the bulls are back. Last week, the crypto market has shrunk by $16 billion in just one day. Different cryptocurrencies have lost 10% or more from their price. However, things are looking bright once again as the market added $8 billion in its market capitalization.

It is true that the crypto market is now evolving. Regulatory changes may have caused a bearish market but it might also be seen as a necessity. Regulatory clarity is a must in order to protect investors not to mention attract institutional investors to invest in the crypto market.