Hong Kong Begins Easing Restrictions on Cryptocurrency Trading

Bloomberg reported that authorities in Hong Kong are set to start easing restrictions on cryptocurrency trading in the city.

Chief Executive Julia Leung stated during the leading Fintech Week on Monday that licensed cryptocurrency trading platforms by the Hong Kong Securities and Futures Commission will be allowed to connect local entities to their global order books. She mentioned that a regulatory circular will be issued later today.

This change moves away from the current model that only matches orders within Hong Kong and will align cryptocurrency trading with local rules applicable to traditional assets.

Hong Kong has been striving for three years to become a regional leader in digital assets, with mixed results thus far. The former British colony has established a licensing system for crypto platforms, listed exchange-traded products tracking Bitcoin and Ether, and oversees digital asset funds. However, cryptocurrency activity remains relatively modest compared to centers like the United States, which has embraced the industry under President Donald Trump.

Bloomberg quoted Leung saying, "You could say we are at the hardest stage. Once we are confident that we can protect investors, we will start gradually easing, as we did with global liquidity."

Additionally, there are leading countries with clear and organized legislation like the United States. The regulatory bodies include the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The U.S. is among the most active countries legislatively; it is working on comprehensive law to classify cryptocurrencies as securities or commodities. Some countries are moving to develop advanced and accelerated legislation within an attractive environment, such as the United Arab Emirates, which is leading in the Middle East.

The Virtual Assets Regulatory Authority (VARA) in Dubai was launched in 2022, being the first official body to regulate cryptocurrency trading. Additionally, Abu Dhabi has a separate regulatory framework under the Abu Dhabi Global Market (ADGM) that allows trading, licensing, and crypto investment funds.

It should be noted that Saudi Arabia has not yet issued a final law, but it is working through the Saudi Central Bank (SAMA) and the Capital Market Authority to prepare a regulatory sandbox for blockchain technologies and digital payments.