Hong Kong is relaxing its crypto regulation to allow retail investors to trade digital assets directly. A licensing regime for crypto platforms that allows retail crypto trading is reportedly set to be enforced in March next year.
Hong Kong is reportedly relaxing its strict cryptocurrency regulation with a plan to allow retail crypto trading, Bloomberg reported Thursday, citing people familiar with the matter.
A mandatory licensing regime for cryptocurrency platforms that allows retail crypto trading is set to be enforced in March next year, the publication conveyed, elaborating:
Hong Kong plans to legalize retail trading for crypto starting in March after years of skepticism — a stark contrast to mainland China’s ban.
Moreover, regulators are seeking to allow retail exchanges to list large cryptocurrencies, like bitcoin (BTC) and ether (ETH), the news outlet added. The listing rules are likely to include criteria such as the token’s market value, liquidity, and inclusion in third-party crypto indexes.
Gary Tiu, executive director at crypto firm BC Technology Group, commented:
Introducing mandatory licensing in Hong Kong is just one of the important things regulators have to do. They can’t forever effectively close the needs of retail investors.
Michel Lee, executive president of digital asset financial services group Hashkey, explained that Hong Kong has been trying to create an all-encompassing crypto regime, citing tokenized stocks and bonds as a potentially more important segment in the future. “Just trading digital assets on its own is not the goal. The goal is really to grow the ecosystem,” he was quoted as saying.
Hong Kong’s top financial regulator, the Securities and Futures Commission (SFC), introduced a voluntary licensing regime in 2018. It restricted crypto trading platforms to clients with portfolios of at least HK$8 million ($1 million). However, the tough regulation turned away many crypto businesses and only two firms — BC Technology Group and Hashkey — were approved.
Many people are skeptical of the new crypto regulation, however. Bitcoin Association of Hong Kong co-founder Leonhard Weese shared:
The kind of conversations I’ve had was that people still fear there’ll be a very strict licensing regime. Even if they’re able to deal directly with retail users, they’re still not going to be as attractive or as competitive as overseas platforms.
The SFC’s director of licensing and head of the fintech unit, Elizabeth Wong, said last week: “We’ve had four years of experience in regulating this industry … We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.” She noted that Hong Kong could also authorize exchange-traded funds (ETFs) to offer exposure to mainstream crypto assets.
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.
Shenzhen, China’s technology manufacturing hub, will be shut down for the next week in effort to curb the rising Covid cases. Only essential businesses are allowed to open, which is expected to cause a ripple effect on the global supply chain.
Home to Chinese tech giants including Huawei and Tencent, Shenzhen ranks third among Chinese cities in manufacturing output meaning any prolonged closure will be felt sharply.
Its factories tool the world with mobile phones, while some of China’s best tech brains go there to churn out apps and games — but Shenzhen is now in lockdown as the coronavirus inflicts economic pain on the country and rattles markets.
Residents in the city of 17.5 million — sometimes dubbed China’s answer to Silicon Valley — have been ordered not to leave unless necessary and public transport has been halted as the country battles its worst virus outbreak in two years.
Most firms have been told to switch to working from home, which is impossible for many factories whose disruption is fuelling unease over supply chains and services. But how significant is Shenzhen to China’s economy?
Home to Chinese tech giants including Huawei and Tencent, Shenzhen ranks third among Chinese cities in economic output meaning any prolonged closure will be felt sharply.
“It is a manufacturing hub and also a tech centre for China,” Hong Hao, of financial services firm Bocom International, told AFP.
Already, major Apple supplier Foxconn has suspended operations in Shenzhen while other tech manufacturers such as Netac Technology also halted some production. Mechanical and electronic products make up 80 percent of exports from the southern powerhouse, which neighbours Hong Kong.
“This is a very significant lockdown and I think the full impact is yet to be revealed,” Hong added. Zhiwei Zhang, chief economist of Pinpoint Asset Management, said consumption would be “hurt quickly and severely” in a lockdown, followed by production and investment.
“It’s a ripple effect,” Hong of Bocom said, noting that other parts of China which depend on Shenzhen’s output could be hit. “They would be working less efficiently than before.” At least six companies on Apple’s supplier list are based in Shenzhen, where other producers such as electric-vehicle firm BYD are also based. But some businesses deemed essential remain open.
Restrictions across the country hitting key hubs could pile pressure on China’s growth target of around 5.5 percent — already the lowest annual GDP target in decades — while Shenzhen’s proximity to Hong Kong is stoking fears of challenges in stopping transmission.
The Yantian port, among the world’s busiest, is also in Shenzhen. It is the largest single port in China, with economists noting it accounts for 10.5 percent of China’s foreign trade container throughput.
In previous outbreaks, the port has been forced to suspend the processing of containers, leading to backlogs, and the current outbreak adds to worries over already-high shipping prices. The port appears to be operating for now, although virus cases could trigger disruptions.
Economists say the impact depends on how long restrictions persist. Zhaopeng Xing of ANZ Research told AFP he believed authorities “can manage Omicron” as well as before within a month or so. “The shock is short-lived,” he said, adding that it would be unlikely to hit the long-term outlook.
U.S. stocks were trading mostly lower early Monday morning after climbing Friday buoyed by strong earnings from Apple and other big companies. The S&P 500 and Dow Jones Industrial Average snapped a three-week losing streak.
Wall Street’s benchmark S&P 500 index rose 2.4% on Friday, giving major indexes their biggest gains this year.
Investors have been rattled by the Federal Reserve’s decision to try to cool inflation by accelerating plans to raise interest rates and wind down bond purchases and other stimulus that is boosting stock prices.
“Prospects of rising rates and shrinking global liquidity compressed within a much shorter time-frame brings with it appreciable risks of unsettling markets,” Vishnu Varathan of Mizuho Bank said in a report.
On Friday, the S&P 500 rose to 4,431.85 for its biggest gain since June 2020. The Dow Jones Industrial Average added 1.7% to 34,725.47. The Nasdaq composite jumped 3.1% to 13,770.57.
In this photo provided by the New York Stock Exchange, traders James Riley and Ashley Lara work on the floor Friday, Nov. 20, 2020. U.S. stocks were trading mostly higher early Monday morning after climbing Friday buoyed by strong earnings from Apple
Asian stocks followed Wall Street higher Monday at the start of a week when China, South Korea and Southeast Asian markets will close for the Lunar New Year holiday.
Benchmarks in Tokyo and Hong Kong advanced while Sydney declined. Markets in mainland China, South Korea and Taiwan were closed. Hong Kong and Southeast Asia were due to close later in the week.
The Nikkei 225 in Tokyo rose 1.2% to 27,028.84 after the government reported December retail sales fell 1% from the previous month’s 2 1/2-year high. That was driven by a 4% fall in food purchases.
The Hang Seng gained 1.1% to 23,802.26 and Sydney’s S&P-ASX 200 shed 0.2% to 6,971.60.
India’s Sensex opened up 1.3% at 57,960.41. New Zealand and Southeast Asian markets gained. The major cryptocurrencies – Bitcoin, Ethereum and Dogecoin were all down hours before the opening bell on Wall Street.
In energy markets, benchmark U.S. crude gained $1.01 to $87.85 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 21 cents on Friday to $86.82. Brent crude, the price basis for international oils, added $1.01 to $89.53 per barrel in London. It advanced 69 cents the previous session to $90.03.
The dollar gained to 115.41 yen from Friday’s 115.23 yen. The euro rose to $1.1166 from $1.1146.
US stocks ended higher Monday after suffering staggering losses earlier in the session, with investors staging a rally after early concerns around the Federal Reserve‘s policy meeting set to kick off on Tuesday.
The S&P 500 dropped briefly into a correction, down more than 10% from its all-time high, but ended higher almost 0.3%. The Dow Jones Industrial Average at one point fell by more than 1,000 and the Nasdaq Composite had logged a 4% loss
“Investors may have gotten a bit too pessimistic about the growth outlook,” said Ed Moya, senior market analyst at Oanda, in a note.
According to Moya, investors may have been reacting to the prospect that the Fed hikes by 50 basis points at its March meeting, higher than the 25 basis points most have been anticipating.
Here’s where US indexes stood at 4:00 p.m. on Monday:
Asian shares advanced on Tuesday, shrugging off a bruising Wall Street session, as Chinese markets cheered Beijing’s move to help troubled property firms, although surging cases of the Omicron coronavirus variant remain a worry for investors.
U.S. stock indexes retreated more than 1% as positive COVID-19 case counts rose and President Joe Biden’s social spending and climate bill hit a significant setback. read more
The negative mood brightened somewhat in Asian hours with European and U.S. stock futures up and some assets battered in Monday’s selling finding buyers, although volumes were thin heading into year-end holidays.
European markets appeared set for a higher open with the pan-region Euro Stoxx 50 futures up 1.1%. German DAX futures rose 0.93% while London’s FTSE futures added 1.02%. U.S. stock futures, the S&P 500 e-minis , were up 0.72%.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) climbed 0.81% after declining on Monday to the lowest in a year. Japan’s Nikkei (.N225) rose 2% after two sessions of decline with chip-related Tokyo Electron (8035.T) and Advantest leading the pack, as investors bought into Monday’s heavy selloff. Australian stocks (.AXJO) were up 0.9%.
While the widespread selling in global shares appeared to have eased, investors are still concerned about Omicron risks. “COVID remains a threat to the global economy. Initial evidence suggests the Omicron variant is more transmissible but results in less severe illness compared to previous variants,” economists at CBA wrote in a note.
Elsewhere in Asia, China and Hong Kong equities rose on Tuesday, with real estate stocks extending their rebound. China’s blue-chip CSI300 index (.CSI300) was 0.45% higher while the Shanghai Composite Index (.SSEC) rose 0.67%. Hong Kong’s Hang Seng index (.HIS) added 0.58%.
The moves higher come as Beijing reportedly urged large private and state-owned property companies to acquire real estate projects from troubled developers to reduce risks that mounting debt piles will destabilise the economy. read more
“Chinese regulators’ encouragement for such acquisitions would help troubled developers ease their debt pressure and improve the current operating conditions of the whole real estate industry,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.
“Thanks to the latest signs of government support, sentiment in the sector has been boosted. That’s why we are seeing real estate companies and other relevant sectors rising in mainland China and Hong Kong today.”
However, China’s video and live-streaming platforms listed in Hong Kong such as Bilibili (9626.HK) and Kuaishou Technology (1024.HK) slumped, after Beijing fined China’s “queen of livestreaming” Viya for tax evasion, stoking fears of fresh crackdowns. read more
On Monday, the Dow Jones Industrial Average (.DJI) fell 1.23%, the S&P 500 <.SPX lost> 1.14% and the Nasdaq Composite (.IXIC) dropped 1.24%.
Europe’s main indexes also sold off after British Prime Minister Boris Johnson said he would tighten coronavirus curbs if needed, after the Netherlands began a fourth lockdown and others in the region considered Christmas restrictions. read more
The dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was down at 96.493. The yield on benchmark 10-year Treasury notes rose to 1.4259% compared with its U.S. close of 1.419% on Monday. The two-year yield , which rises with traders’ expectations of higher Fed fund rates, touched 0.636% compared with a U.S. close of 0.63%.Oil prices started to recover from concerns the spread of the Omicron variant would crimp demand for fuel and signs of improving supply. U.S. crude ticked up 1.31% to $69.51 a barrel. Brent crude rose to $72.25 per barrel. Gold was slightly higher. Spot gold was traded at $1,792.01 per ounce.
Hong Kong is not only an international financial centre, it is the most important gateway to Mainland China – and connectivity is the key to enhancing cross-boundary transactions. The Chinese central government is committed to ensuring that Hong Kong maintains its status as a free port and a separate customs territory, and at the same time focus on the development of the Guangdong-Hong Kong-Macau Greater Bay Area (GBA).
Hong Kong has long been a gateway to and from Mainland China, and different data points show that the city originates and intermediates about two-thirds of China’s inward foreign direct investment and outward direct investments. As one of the Mainland’s principal trading partners, Hong Kong not only provides a channel for goods and services to go global, but also catalyses the international usage of renminbi along to the process.
The renminbi (RMB) has retained its position as the fifth most active currency for international payments by value, with a share of 2.15% as of August 2021, according to Swift data. Since the launch of the pilot scheme for cross-border trade settlement in renminbi in 2009, RMB trade settlement handled by banks in Hong Kong has seen exponential growth.
Hong Kong remains the most important offshore RMB economy by weight, accounting for more than 75% of the global total. For the financial services sector, central and Hong Kong authorities are seeking to further promote cross-boundary RMB investment and financing activities, encourage competitive Mainland Chinese enterprises are also issuing green and sustainability related products in Hong Kong, aiming it to become a hub for green finance within the GBA.
“With complementary advantages of respective markets and systems in the GBA, the financial services industry in Hong Kong has much expectation on the coordinated development of the region,” said Laurence Li, chairman of the Financial Services Development Council (FSDC), a high-level cross-sectoral advisory body set up by HKSAR Government in 2013 to promote Hong Kong’s financial services industry.
“At the same time, different stakeholders have been engaging in conversations and preparatory work to enhance the connectivity and standards of financial services and product offerings. With some favourable measures being introduced and implemented in an orderly manner, the industry believes the ever-improving connectivity of financial markets will lead to uncharted market potentials.”
The FSDC has made efforts in facilitating Hong Kong’s financial services industry to capture market opportunities in the GBA. FSDC has recommended and advocated for connecting cross-boundary payment and transfer infrastructure, enhancing the convenience of remote account opening procedures, as well as fostering cross-boundary mortgage financing, mutual funds, insurance and wealth management.
In a recent research paper, the FSDC recommended connecting cross-boundary payment and transfer infrastructure, enhancing convenience of remote account opening procedures, as well as fostering cross-boundary mortgage financing, insurance and wealth management businesses. Through capitalizing on its unparalleled strengths, Hong Kong can play a unique role in driving the concerted development of the financial services industry, and in turn enjoy the growth momentum in the region.
The newly launched Wealth Management Connect scheme will help diversify investment portfolios through exposure to overseas markets via retail funds domiciled and regulated in Hong Kong, while attracting offshore investments to onshore wealth management products in Mainland. It will also allow Hong Kong investors to broaden their mainland exposure.
Wealth Management is a major breakthrough in which retail investment funds domiciled in Hong Kong and authorized by the Securities and Futures Commission (SFC) are eligible for the scheme instead of the traditional product by product approval approach.
The scheme further integrates the Mainland and Hong Kong markets and promotes cross-border trading, following on from the successful launch of the two Stock Connect schemes that linked the stock markets of Hong Kong with Shanghai and Shenzhen in 2014 and 2016, respectively.
According to a recent KPMG client note, Wealth Management Connect represents another “significant development” in the liberalization of Mainland China’s capital account following the launch of QFII/QDII, the Mainland-Hong Kong Mutual Recognition of Funds scheme and the Stock Connect and Bond Connect schemes. The firm expected these developments would accelerate RMB internationalization and strengthen Hong Kong’s position as a global offshore RMB hub.
Meanwhile, the new southbound leg of China’s Bond Connect programed will stimulate demand from Mainland Chinese investors for Hong Kong and US dollar-denominated bonds, boosting liquidity and, thus, facilitate a more efficient price discovery process. The launch of the southbound link could broaden the investor base for both Hong Kong dollar and offshore RMB bonds, whereas the support for the US dollar bond market could be strengthened even further.
Hong Kong should also be a main contributor to the collaboration in green finance, development of Fintech and digital assets in the GBA in the future. Last but not least, the various financial liberalization measures carried out in the region will foster closer exchange among different stakeholders, including regulators and market participants, provide an appropriate market dynamic, and are in line with the longer-term national objectives of financial liberalization and internationalization. Hong Kong, in this context, will continue to play its unique role as China’s only international financial centre.
The cross-boundary nature of Hong Kong’s financial services sector, especially asset management, is constantly being reshaped thanks to the joint efforts of the government and the sector, leading to an increasing number of available product types, a wider reach to more local, international and Mainland investors with different experiences, and more diversified investment strategies and preferences. Just as the Wealth Management Connect is on the horizon, Hong Kong is marching steadily towards its vision of becoming the world’s premier wealth and asset management centre.
Financial Services Development Council (FSDC) was established in 2013 by the Hong Kong Special Administrative Region Government as a high-level, cross-sectoral advisory body to engage the industry in formulating proposals to promote the further development of the financial services industry of Hong Kong and to map out the strategic direction for the development. The FSDC has been incorporated as a company limited by guarantee with effect from September 2018 to allow it to better discharge its functions through research, market promotion and human capital development with more flexibility.
“Gross domestic product (2009)”(PDF). The World Bank: World Development Indicators database. World Bank. 27 September 2010. Archived(PDF) from the original on 12 September 2009. Retrieved 5 October 2010.
Hong Kong is relaxing its crypto regulation to allow retail investors to trade digital assets directly. A licensing regime for crypto platforms that allows retail crypto trading is reportedly set to be enforced in March next year.
Moreover, regulators are seeking to allow retail exchanges to list large cryptocurrencies, like bitcoin (BTC) and ether (ETH), the news outlet added. The listing rules are likely to include criteria such as the token’s market value, liquidity, and inclusion in third-party crypto indexes.
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