Crypto exchanges will soon be able to register in Hong Kong

We have written about Hong Kong’s crypto ambitions several times in recent months. Earlier this year, with the implementation of specific crypto legislation, the city-state expressed its ambition to become a crypto hub. This trend continues and from June 1, crypto exchanges can apply for licenses from the Hong Kong financial watchdog.

Strict rules for crypto exchanges

Tuesday Hong Kong’s Securities and Futures Commission (SFC) announced that it will issue the licenses. However, the crypto exchanges will have to adhere to a lot of rules if they want to serve customers in Hong Kong. These rules are largely intended to protect consumers.

For example, crypto ‘donations’ are not allowed in Hong Kong. This includes crypto air drops, as we recently saw with, for example, Arbitrum (ARB). Airdrops would encourage consumers too much to invest in crypto. Remarkably, the trade in stablecoins will also be “prohibited for consumers” for the time being. This is because there are no clear laws in force for this crypto category yet.

There will also be financial rules that exchanges must adhere to. For example, exchange platforms must keep a fixed reserve of capital in reserve at all times. They must also provide monthly insight into the financial state of affairs. There will also be very strict requirements for which tokens may be offered. Silly meme tokens like PEPE are therefore not expected to be seen on exchanges in Hong Kong anytime soon.

The European Union is also taking steps

We will also have similar measures in the European Union from next year. The MiCa law, which was passed last month, also includes details about the licensing process for crypto exchanges in Europe.

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More and more governments seem to be regulating the crypto industry, but this is still difficult in the United States. There, regulators seem to refuse to provide clarity for the crypto sector. Many American crypto firms are therefore considering a move to, for example, Hong Kong and Europe.

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