Hong Kong's special administrative region is slowly growing more friendly to cryptocurrencies startups with a proposal to allow retail investor trading to distinguish itself from mainland China.
The majority of retail traders relying on unlicensed exchanges to operate in Hong Kong have prevented platforms from providing services to retail traders due to strict regulations in the country.
In the past year, virtual assets have gone from peak to low price levels, said Julia Leung, CEO of the Securities and Futures Commission SFC at the Asian Financial Forum in Hong Kong. When platforms and some token collapsed, the froth is taken out of the system, and it focuses investors and sellers' minds on investor protection. Hong Kong authorities have been on a path to protect retail traders from the risks of criptocurrency scams and NFT fraud in recent years, and that is a priority for investor protection.
Last year, Hong Kong's SFC announced that the NFTs or non-fungible token exposed investors to heightened risks. If investors can't fully understand the risks and bear the potential losses, they should not invest in NFTs, the SFC said.
Hong Kong has cracked down on retail traders over the past few months and said only seasoned professional traders would be authorized to trade cryptocurrencies in its jurisdictions to minimize the risks to retail investors.
Hong Kong regulators are trying to lure back firms that vanished from Asia's financial capital by calling for a more solid footing in their territory.
Hong Kong is testing a new central bank digital currency, known as the e-HKD, as part of an NFT pilot program. Last year, the country s central banking authority, the Hong Kong Monetary Authority, announced plans to disclose a stable coin and a cryptanalym, and asked the public to weigh in on eight questions related tocryptocurrencies.
The country said this week it would be receptive to a fundETF, a futures exchange-traded fund, and allow licensed crypto exchanges to offer services to retail traders.