Key Points
- Julia Leung, Hong Kong SFC chief, acknowledges the resilience and staying power of Bitcoin as an alternative asset.
- The SFC is working on a new regime to regulate stablecoins and has initiated a licensing requirement for crypto trading platforms.
Julia Leung, the chief executive of the Hong Kong Securities and Futures Commission (SFC), has acknowledged the resilience and staying power of Bitcoin as an alternative asset.
In a recent speech, Leung stated that despite the debate over the intrinsic value of virtual assets like Bitcoin and Ethereum, Bitcoin has proven its durability over 15 years through multiple boom and bust cycles.
Licensing Requirement for Crypto Trading Platforms
Leung’s comments coincide with the SFC’s recent implementation of a licensing requirement for all crypto trading platforms serving retail investors in Hong Kong. This move has drawn criticism from some quarters, with concerns being raised about the stringent nature of the regulations.
Duncan Chiu, a local lawmaker, has voiced concerns that these stringent regulations are deterring major global exchanges from entering the Hong Kong market and undermining market confidence.
Despite the SFC’s support for the Web3 ecosystem in Hong Kong, Leung stressed that this should not be construed as an endorsement of the virtual asset (VA) asset class. She highlighted the speculative nature of VAs and the extreme price volatility they exhibit.
Regulation of Stablecoins
The SFC is also moving towards the regulation of stablecoins. Leung mentioned that preparations are underway for a new regime to regulate fiat-referenced stablecoins. This includes requiring stablecoin issuers to ensure full backing by high-quality and highly-liquid reserve assets.
The SFC is also part of Project Ensemble, a tokenization initiative launched by the Hong Kong Monetary Authority (HKMA) in March. The project aims to explore the potential of a central bank digital currency. Initial focus will be on tokenized deposits, with a sandbox being launched to pilot tokenization use cases.