Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), aims to approve additional licenses for digital-asset exchanges by the close of 2024, following a detailed five-month assessment process.
What Happened: This announcement, made by Eric Yip, the SFC's executive director for intermediaries, at the Fintech Week event, reflects Hong Kong's efforts to establish itself as a prominent hub for digital assets after recent political turmoil.
"The applicants and their controllers have largely adopted our feedback, showing a commitment to investing resources in line with regulatory expectations," Yip stated, according to a Bloomberg report
The SFC's inspection process, which began in June with provisional permits, revealed operational issues in some platforms.
These firms are required to implement corrective measures and complete a third-party review with the SFC before they are granted restricted licenses. A finalized list of licensed exchanges is expected to be released by the end of the year.
To support ongoing regulatory efforts, the SFC plans to create a consultative panel early next year, comprising representatives from licensed exchanges to strengthen collaboration.
Additionally, the regulator is designing a more comprehensive framework to oversee crypto over-the-counter (OTC) trading desks and custodial services, Yip explained.
In a parallel move to enhance Hong Kong's role in the digital finance space, Hong Kong Exchanges and Clearing Ltd. has introduced a Virtual Asset Index Series aimed at providing reliable benchmarks for Bitcoin BTC/USD and Ethereum ETH/USD prices within Asia-Pacific trading hours.
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Why It Matters: This initiative aligns with the city's broader ambition to establish itself as a leader in the digital asset market in the region.
As Hong Kong looks to deepen its involvement in the digital asset ecosystem, a prominent proposal from financial and academic leaders suggests that the government should consider issuing a state-backed stablecoin, dubbed HKDG.
Spearheaded by Wang Yang, a prominent Web3 specialist and Vice Chancellor at Hong Kong University, alongside investors and blockchain advocates, the proposal argues that an HKDG stablecoin, tied to Hong Kong's foreign exchange reserves, would enhance financial efficiency and inclusivity.
The proposal suggests that an official HKDG stablecoin would provide a competitive alternative to existing private stablecoins such as Tether USDT/USD and USD Coin USDC/USD, citing the success of Singapore's XSGD stablecoin.
By using foreign exchange reserves, which stand at approximately $430 billion, HKDG could offer higher reliability and stability compared to private stablecoins, which collectively hold a market cap of about $110 billion.
The authors argue that this approach would also help Hong Kong remain competitive in the global digital finance market while offering additional liquidity for government-backed initiatives.
The potential of HKDG will be a focal point of discussion at the upcoming Benzinga Future of Digital Assets event on Nov. 19.
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