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2022 set out again, Xiangjiang encryption vision of the tide ebb tide

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Hong Kong's crypto vision started as early as 2017, but continued to fall out of the front row until this year when it finally decided to open the door to Web3 and crypto assets.

Original title: "2022, the Hong Kong encryption vision of the tide ebb tide"

Original article by Frank, Foresight News

On 31 October, the Hong Kong SAR Government issued the Virtual Assets Policy Declaration, which sets out the Government's policy position and guidelines for the development of a dynamic virtual assets industry and ecosystem in Hong Kong. It covers the vision and guidelines, supervision, pilot plans, etc. (Further read theFull text: Policy Declaration on the development of virtual assets in Hong Kong"), the government's welcome and encouraging attitude towards the development of virtual assets and Web3.

Among them, "stepping up preparations for the licensing system of new virtual asset service providers" is a bright spot. According to Bloomberg previously cited sources, Hong Kong's compulsory licensing plan for cryptocurrency platforms, which is scheduled to be implemented in March next year, will allow retail trading of cryptocurrencies in order to become a crypto hub.

In general, whether it is from the first day of this Fintech week Web3 related personnel dense pressure array appearance, or virtual assets policy declaration in the stirring solemn promise, further clearly declared to the world that Hong Kong Web3 and crypto assets open the door full sincerity.

2017-2022, Hong Kong encryption policy and major events review

Grass snake gray line, volt vein thousand miles. If we take an overview of Hong Kong's crypto policy enactment process and related major events, we will find that Hong Kong started to layout around crypto assets as early as 2017, and it is mainly divided into two stages:

From 2017 to 2020, with the SFC as the main regulatory body, the Hong Kong government issued a series of policy documents related to ICO, STO and cryptocurrency transactions, and gradually improved the regulatory framework. From 2021 to 2022, led by the Hong Kong Monetary Authority and the Hong Kong Exchange, Hong Kong took frequent actions in tokenized bonds, digital Hong Kong dollar, central bank digital currency (CBDC) and other aspects, which overshadowed the track directly related to crypto assets;

But at the same time, the reality is the opposite -- whether FTX, BitMEX and other encryption companies have chosen to move out of Hong Kong, or this year's popular Web3 volume to Singapore, all let Hong Kong after missing the Internet, it seems to further fall in the Web3 era front row.

It was not until this year, especially after the new government came to power, that Hong Kong clearly changed its vision and began to regroup in policy and other aspects, preparing to compete with Singapore, London, New York and other cities for the position of global crypto financial center and virtual asset center.

In 2017,

On 5 September 2017, the SFC issued theStatement regarding initial coin offeringsTo clarify that depending on the facts and circumstances of the individual ICO, the digital tokens offered or sold may be "securities" as defined in the Securities and Futures Ordinance and be regulated under the Securities legislation of Hong Kong.

It is worth noting that on September 4, 2017, the day before this statement was released, seven ministries and commissions, including the People's Bank of China, jointly released theThe announcement of the People's Bank of China and other seven departments on preventing the financing risk of coin issuance", clearly defining ICO as "an unauthorized and illegal public financing activity" and demanding that "all types of coin issuance financing activities should be stopped immediately".

On 29 September 2017, the SFC issued theCircular on the publication of the SFC regulatory SandboxTo provide a restricted regulatory environment for eligible companies to carry out their regulated activities under the Securities and Futures Ordinance prior to the full application of fintech in their business.

On 11 December 2017, the SFC issued theCircular to licensed corporations and registered bodies on Bitcoin futures contracts and investment products related to cryptocurrencies", intermediaries providing bitcoin futures contract trading services and related services (including the transmission or transmission of trading orders) to investors are required to be licensed and regulated by the SFC, and the SFC also reminds investors to guard against investment risks.

In 2018,

On 9 February 2018, the SFC issued theThe CSRC warned investors against the risks of cryptocurrencies"Press release.

On 1 November 2018, the SFC issued theStatement on the regulatory framework for managers, fund distributors and trading platform operators of virtual asset portfolios", elaborated the SFC's regulatory attitude towards virtual asset trading platforms, including the establishment of a regulatory sandbox mechanism, and published the objectives and basic conditions for the supervision of virtual asset portfolio companies, fund distributors and platforms.

On the same day, the SFC issued theRegulatory standards applicable to licensed corporations managing virtual asset portfolios","Circular to Intermediaries - Distribution of Virtual Asset Funds"And" for cryptocurrency exchanges."A conceptual framework that may regulate the operators of virtual asset trading platforms".

In 2019,

On February 14, 2019, the SFC publicly accepted sandbox applications.

On 28 March 2019, the SFC issued theStatement regarding the issuance of security tokensTo remind companies or individuals engaged in security token offerings of the applicable legislation and regulatory requirements, confirming that STO sales require a brokerage licence No. 1 and that it is a criminal offence for any person to engage in regulated activities without a licence unless exempted.

On October 4, 2019, the SFC issued theStandard terms and conditions applicable to a licensed corporation managing a portfolio invested in virtual assets", imposes a series of terms and conditions on fund managers who meet certain conditions to manage portfolios invested in virtual assets. From the perspective of virtual asset fund management companies, it proposes specific requirements on company qualification, risk management, compliance audit, anti-money laundering and anti-terrorism.

On November 6, 2019, the SFC issued theThe Securities Regulatory Commission issued a warning about virtual asset futures contracts"And"Position Paper: Regulating virtual asset trading platforms", expounded on the new regulatory framework of virtual assets trading platform, emphasis on virtual assets in the middle of the Hong Kong business trading platform and on its platform is at least one type of securities tokens provide trading services company, to the CSRC for type 1 and 7 regulated activity of license plates, virtual assets trading platform operators once a licensing, Will be placed in the CSRC's regulatory sandbox.

In 2020,

On 22 January 2020, the Hong Kong Monetary Authority issued theResults of the "Inthanon-LionRock Project" and the next step", published the results of the central bank's research on digital currency, and plans to further cooperate with the Bank of Thailand.

On July 15, 2020, the Legislative Council of Hong Kong formally adopted theLimited Partnership Fund BillTo introduce a new statutory framework for Funds incorporated in Hong Kong, "Limited Partnership Funds", effective 31 August 2020. The definition of "fund" in the Bill includes funds investing in digital assets (e.g. cryptocurrencies and virtual assets, etc.).

On 3 November 2020, the Financial Services and the Treasury Bureau of the HKSAR Government issued thePublic consultation on proposed legislation to strengthen the control of money laundering and terrorist financing in Hong KongTo establish a licensing system for virtual asset service providers. According to the consultation paper, the activities covered by the regulation include the trading, transfer, custody and management of virtual assets, as well as the provision of financial services for the issuance of virtual assets. Virtual assets are defined by the Special Organization as "assets whose value is expressed in digital form and which can be bought, sold or transferred digitally, or used for payment or investment purposes".

On November 3, 2020, Charles Li, then CEO of HKEX, said at the Hong Kong Fintech Week Forum that he was discussing using blockchain technology to transmit reports to the mainland for Hong Kong Stock Connect trading activities.

On 15 December 2020, the SFC filed a complaint with OSLWhich licenses(Category 1 "Securities Trading" and Category 7 "Automated Trading Services"), OSL became the first digital asset trading platform in the world to be licensed by the SFC (as of this publication,SFC websiteOSL is still only shown as licensed), which can trade bitcoin, Ethereum and security tokens that pass the screening.

In 2021,

On 21 May 2021, the Financial Services and the Treasury Bureau of the HKSAR Government issued theLegislative proposals to strengthen the control of money laundering and terrorist financing in Hong KongTo collect views on amendments to the Anti-Money Laundering Ordinance to establish a licensing system for virtual asset service providers.

On 8 June 2021, the Hong Kong Monetary Authority released the"Fintech 2025"Strategy, mentioned that it is committed to researching central bank digital currency at the wholesale level and working with the Hong Kong Centre under the Innovation Hub of the State Settlement Bank to study central bank digital currency at the retail level. After that, it will start researching local retail Hong Kong dollar digital currency (e-HKD) to explore its use cases, advantages and associated risks. In addition, the HKMA said it would continue to work with the People's Bank of China to conduct technical tests on the digital Renminbi in Hong Kong, so as to provide convenient cross-border payment services for Hong Kong and mainland residents.

On 24 August 2021, the Innovation Centre of the Bank for International Settlements (BIS) and the Hong Kong Monetary Authority (HKMA) agreed on a collaboration planned to be explored through Project GenesisTokenized green bonds, aimed at supporting small investment, simplifying the bond issuance process and improving the issuance efficiency.

On October 4, 2021, the Hong Kong Monetary Authority issued theDigital Hong Kong Dollar e-HKD Technical White Paper at the retail level, the White paper builds on a retail-level central bank digital currency model jointly developed by the HKMA and the Hong Kong Centre under the Innovation Hub of the Bank for International Settlements to explore potential technical options for the issuance and distribution of retail-level central bank digital currency. The design proposed in the white paper is a technical framework proposed by the central bank with groundbreaking arrangements to protect privacy and enable transactions to be tracked with privacy safeguards.

Hong Kong Monetary Authority (HKMA) has partnered with the People's Bank of China (PBOC) to promote the testing of digital Renminbi (DCEP) in Hong Kong, in order to provide residents of both places with convenient cross-border payment services, said Richard Yu Wai-man, chief executive of the Hong Kong Monetary Authority (HKMA), at the 2021 Financial Street Forum Annual Meeting on October 21, 2021.

The Hong Kong Monetary Authority is looking into issuing a central bank digital currency (CBDC) for retail use, Hong Kong Financial Secretary Paul Chan Mo-po said at the Hong Kong Fintech Week 2021 on Nov 3, 2021.

In 2022,

On 29 January 2022, the Hong Kong Monetary Authority and the Hong Kong Securities Association issued theJoint circular on virtual asset related activities of intermediariesTo allow intermediaries to collaborate with SFC licensed virtual asset trading platforms to provide digital asset investment services to professional investors.

On 27 April 2022, the Hong Kong Monetary Authority released a report entitledE-hong Kong Dollar: Policy and Design perspectives", seeking views on key issues for a retail central bank digital currency (CBDC) e-HKD, with authorities focusing on issues such as issuance mechanisms, interoperability with other payment systems, privacy and data protection.

On 6 July 2022, the Secretary for Financial Services and the Treasury moved the second reading ofCombating Money Laundering and Terrorist Financing (Amendment) Bill 2022", emphasizing the engaged in business of virtual assets exchange, must report to the CSRC for licences, relevant personage should conform to the appropriate person for standards and comply with the blow money laundering regulations to crack down on money laundering and terrorist financing provisions, including customer due diligence and keeping records such as regulation, and the other by the securities and futures commission through licensing conditions imposed strict regulatory requirements, For example, a licensed virtual asset service provider should have sufficient financial capacity, knowledge and experience, and have in place risk management policies and procedures, listing and trading policies for virtual assets, proper financial reporting and disclosure arrangements, and mechanisms to prevent market manipulation, irregular activities and conflicts of interest.

Hong Kong Monetary Authority (HKMA) will launch a series of pilot schemes with banks and technology companies to test the digital Hong Kong dollar (e-HKD) from the fourth quarter, Chief Executive Albert Yu Wai-man said on Sept 29, 2022.

On October 19, 2022, Li Ka-chiu, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), issued his first"address, which stated that the Government would take measures to comprehensively enhance the competitiveness of Hong Kong's financial services. For virtual assets, the Government has introduced a Bill proposing the introduction of a statutory licensing system for service providers; The HKMA is studying market views on regulatory stablecoins and will ensure that the regulatory regime is consistent with international regulatory proposals and appropriate to local circumstances; In addition, the HKMA has started preparatory work for "digital Hong Kong Dollar" and is working with mainland institutions to expand the testing of "digital Renminbi" as a cross-border payment instrument in Hong Kong.

On 16 October 2022, Hong Kong Financial Secretary Paul Chan Mo-po published an article entitled"Innovation Development in Hong Kong, said that "the Policy Declaration will clearly express the Government's position to demonstrate to the global industry our vision to develop Hong Kong into an international virtual asset centre and our commitment and determination to explore financial innovation with the global asset industry".

On October 28, 2022, according to a report jointly released by the Bank for International Settlements (BIS) and othersCurrency Bridge Project: The central bank's digital currency facilitates economic integration and connectivityPublished case, by the bank for international settlements (Hong Kong) innovation center, the Hong Kong monetary authority, Thailand's central bank, the People's Bank of China of the construction of the digital currency research institute and the united Arab emirates central bank joint multilateral bank digital currency bridge project successfully completed based on the four central bank pilot, the first true digital cash transactions within six weeks, Twenty commercial banks from four different jurisdictions have completed 164 cross-border remittances and foreign currency exchanges for their clients through the platform, with a total value of more than 150 million yuan.

On 31 October 2022, the SFC issued theCircular on Virtual Asset Futures exchange-traded Fund"To create new rules for cryptocurrency futures ETF issuers that include any products that meet the requirements for managing unit trusts, mutual funds and unlisted structured products; ETF issuers are required to demonstrate at least a three-year track record of performance and regulatory compliance; Issuers will need to demonstrate that digital asset ETFs are liquid enough; The net derivative exposure cannot exceed 100% of the ETF's total net asset value; Issuers need to conduct investor education prior to launch.