Regulations on cryptocurrencies
According to reports, James Lau, Hong Kong’s Secretary of Financial services and Treasury has made a statement restricting who mines cryptocurrencies like Bitcoin. Based on the statement, these activities fall under the Trade Description of Ordinance.
Hong Kong has been trying to change the crypto landscape for some time now. It has been the centre for Fintech innovation and other significant markets within the growing Blockchain economy.
The Country supports a much more specialised Administrative region and benefiting from a different legislative ruling than China. There is currently no statutory regulations that apply directly to cryptocurrencies. This has pushed Hong Kong to try changing the way this works.
Back in November of 2018, the Securities and Futures Commission (SFC) revealed a proposal for a new framework of regulation with crypto exchanges.
The SFC has been approaching this matter from an explorative standpoint and according to the CEO of SFC, Ashley Alder:
“Those exchanges that want to be regulated by us will be set apart from those that don’t. This is essentially an opt-in approach for exchanges and platform operators. And they will first explore the conceptual framework with us in a strict sandbox environment.”
The country currently allows crypto exchanges to require to only deal with institutional investors. Which the SFC sees as safeguarding investors.
Crypto Exchanges react to Regulations
The recent regulation spike in cryptocurrency is also a sign of bitcoin and other cryptocurrency markets growth over the years as companies, institutions and individuals have been confirming the growth and acceptance of cryptocurrency as a legitimate asset class.
The Sandbox proposal has made things move a step closer in the wrong direction.
According to Bitcoin Association of Hong Kong, Leo Weese, the recommendations are unnecessary and may lead to the shutdown of exchanges.
He mentioned in the South China morning Post that:
“While Hong Kong was a better place when it did not bother such platforms, it was inevitable this day would come. Exchanges will likely maintain parts of their teams in Hong Kong, but work harder to convince the public of new narratives that places them outside the SAR.”
Many hope, that Hong Kong will not be following in the leads of China when it comes to the mining of bitcoins.
However, the worlds largest crypto mining equipment company, Bitmain has lapsed its IPO applications for the Hong Kong Stock exchange.
Even though regulations is a necessary component for early investors to get into this cryptocurrencies as this brings them protection and confidence, it is not a requirement, as cryptocurrencies are already heavily regulated by their own algorithms, Internet protocol, mining, peer-to-peer system and crypto-economics.