Cryptographic regulations are a competitive company in Asia, with places such as Hong Kong and Singapore in the running to become an Asian crypto hub and capture all the cases associated with this status.
The challenge, however, lies in the development of a rules book that balances investor protections with a reception for businesses and new capital. And here, Hong Kong has an advantage in places like Japan or Korea, because its Common Framework for Traditional Finance has made its economy one of the most open and free – a recent report of a group Canadian reflection considered Hong Kong the “most free economy” in the world, with Singapore just behind it in second place.
With Crypto, however, Hong Kong moved relatively slowly, in particular compared to Singapore. But Duncan Chiu, member of the legislative council of Hong Kong and president of its technology and innovation committee, which oversees technological parks and Hong Kong research facilities, affirms that the initial prudence of the territory with regard to the regulations Crypto is present with advantages.
“Being a late mover is sometimes a good thing because you have a clear image,” said Chiu in a recent interview with Coindesk. For example, he underlined how the monetary authority of Singapore (Mas), the main financial regulator of the city state, quickly adopted rules for crypto. MSA initially regulated crypto under its law on payment services, treating the crypto in an inaccurate manner as a payment tool rather than a asset class. Japan did the same thing from the start, forcing subsequent revisions in 2024 that DEFI and tokenization finally gained ground.
“While Hong Kong started late, the right thing is that there were clearer models of the way these products were used,” said Chiu, who is one of the most eminent voices in Hong in Hong Kong, with his colleague Legco Johnny NG. Chiu he also indicated how the original Bitcoin white paper labeled the class of assets as electronic money, while the reality of the market is that it has become more a commodity – a vision shared by the commodity And the American -term exchange committee – like another example of how market behavior around the crypto has evolved and needed regulations to adapt.
Build regulatory alignment
One of the main problems that Chiu said that he would like to work in Legco is to build a clear classification for different types of digital assets, such as VS stable cryptocurrencies, while working with global regulators to ensure alignment between them.
“We need clear definitions and segmentation,” said Chiu. “Some assets should be regulated as titles, while others must remain unregulated, such as the same.”
According to Chiu, even must be treated like collectibles, a bit like cards or Pokémon stamps.
“Samecoins does not have a functionality behind them – they do not use intelligent contracts,” said Chiu. “These are only items to collect, so I see no reason to regulate them as financial products.”
A dedicated cryptography regulator?
Given the way in which crypto is unique as a class of assets, certain jurisdictions, such as Dubai and its Virtual Asset Regulatory Authority (VARA), have created their own separate regulator for virtual assets.
When asked if he thought that Hong Kong should take the same path, Chiu recalled that in his first years in Legco, he initially supported the creation of a digital version of the Securities and Futures Commission (SFC ), the regulator of the territory markets, called, called the “ESFC”.
However, the Hong Kong government has rather chosen to maintain cryptographic surveillance under existing financial regulators. The SFC has a dedicated digital active team, while Hong Kong Monetary Authority (HKMA) supervises stablecoins. Chiu has said that for the moment, it is satisfied with this arrangement, especially since the SFC extends its workforce even when the government calls for austerity elsewhere.
“The government’s intention is to keep everything under the SFC. They will have a team inside the SFC and they hire. We have just approved this in Legco, “noted Chiu.
Legco Crypto priorities
Chiu considers the establishment of commercial and guardian regulations in OTC as the next major priorities for Legco, while leaving construction rules around cryptographic derivatives and rising from SFC and Crypto exchanges, rather than transmitting new laws.
Chiu considers cryptographic regulations as a priority among the first five, the others being mainly around the problems of economic recovery and public security in Hong Kong. But he recognizes that all his colleagues member of Legco do not share this same urgency concerning the regulation of cryptography, some wishing to focus on the construction of the most strict investor protection mechanisms, in order to avoid another FTX or JPEX, whose failures have both left many failures in Hong Kong – and around Asia – with a large hole in their digital wallets
However, there is little legislative bandwidth available. The Hong Kong labor market is low and the real estate sector is on the precipice of a painful correction. Hong Kong is also taken between the United States and continental China during the next trade war of Donald Trump, which makes a difficult economic recovery for the territory.
“Some Legco members are great supporters of virtual assets, but not all, of course,” said Chiu. “They all have different priorities.”
