Hong Kong’s Central Bank Chief Warns About Strict Crypto Regulations
HKMA or Hong Kong Monetary Authority has shared its impression concerning cryptocurrency markets in the region. To this end, Eddie Yue Wai-man, the Chief Executive of HKMA has recently told the media that stakeholders must brace for strict regulations.
He took a steadfast stance on the matter by asserting that there are other jurisdictions open for those who are looking for more leeway in this regard. HKMA is the Central Banking Authority of Hong Kong that is currently working on implanting new regulatory guidelines on the crypto market including stablecoins and the DeFi sector.
Hong Kong has retained crypto-savvy policies as part of its objective to emerge as a global leader in blockchain technology. The statement issued by HKMA coincides with the issuance of licensing regulations for crypto exchanges operating within the city jurisdiction.
Speaking with Bloomberg Wealth Asia Summit, he maintained that digital asset regulations are not relaxed or laid back but cover the legible market conduct for crypto stakeholders in great detail. The new regulations may mold the crypto market in the new direction.
Yue further told the media that the institution intends to ensure that the crypto entities can continue to develop, innovate, and maintain their ecosystems. He claimed that there is lots of hype in the fintech circles regarding the developing crypto industry.
Meanwhile, he maintained that at the same time, there is no question of any easy-going regulatory rules. Hong Kong has remained a prime location for cryptocurrency firms that are relocating from other regions since October last year. The city has retained its objective to become a global virtual asset center.
In February, the Securities and Futures Commission or SFC mandated that retail crypto investors may only purchase large market cap currencies such as Bitcoin and Ether from regulated exchange platforms.
As per the new rules, all crypto exchange platforms in the region have to acquire a license from regulators starting next month. The HKMA is also working on stablecoin regulation that could go into effect starting in 2024.
The central banking authority will make it compulsory for the stablecoin-backed reserves to remain equal to the total supply at all times.
HKMA Discusses Risks Linked with Crypto Trading
During the turbulent times, HKMA retained support for virtual asset markets. However, the firm has also issued risk warnings on account of the volatile nature of cryptocurrencies. Last month, Hong Kong hosted a crypto event as part of its virtual asset development mandate from last year.
The institution has maintained that the government authorities intend to monitor all DeFi activities and believe that they should adhere to the licensing requirements of HKMA.
Keith Choy is the head of the intermediaries division at SFC on an interim basis. He addressed the attendees at the Hong Kong Web3 Festival. During his address, he claimed that offering automatic trading services is a regulated process regardless of if it is decentralized or centralized.
Clara Chan, the executive director of HKMA, was also among the participants of the Web3 festival. She has issued a warning that certain blockchain utilities are not inclusive of intrinsic value. Therefore, such projects are often subjected to big price changes and suffer from considerable price volatility.