The regulator now follows the market and industry after crypto firms left the city.
HK Friends who ran investment funds and invested in crypto introduced Christopher Hui to crypto. He sets sector policy as secretary for Financial Services and the Treasury of Hong Kong (FSTB).
He asked a colleague at Hong Kong FinTech Week in early November if he should buy his first virtual asset. The bureau is piloting NFTs, green bonds, and the e-HKD, a central bank digital currency (CDBC).
The industry expected a regulatory framework, but not the shift in stance. FinTech Week featured many metaverse-themed stalls and panels, and top regulators, including Hui, advocated for the city’s return as a crypto hub.
Hong Kong has several crypto regulators. The Securities and Futures Commission enforces stablecoins while the Hong Kong Monetary Authority investigates.
Hui’s FSTB regulates macro. It appears to be placing crypto within financial regulation and opening up discussion about allowing retail investors under the incoming regulatory framework, which was previously a no.
Hui’s prominence and appearance at Hong Kong FinTech Week panels on crypto indicate that Hong Kong regulators see it as part of the city’s economic future.
Hui echoed other high-profile Hong Kong regulators who see crypto as mainstream finance. Hui said he views crypto as an investment tool rather than a bid for fiat currency freedom when asked about its founding ideals.
He seemed cautiously optimistic about its applications. “Potentially, it is a transformation to how society and economy work,” he told CoinDesk of the technology. “It’s not built overnight.”
He values use cases: “My inclination is to see through these investments and look at what’s behind and underlying them,” he said.
He is most excited about green bond tokenization, which streamlines the issuance and investment process.
Hong Kong has issued $10 billion in green bonds in dollars, euros, and renminbi. Institutions and the entire value chain—issuance, settlement, asset servicing, secondary trading, and retention—will be the pilot’s focus.
Hui added that technology can shorten initial public offering subscriptions and other bottlenecks.
Singapore and Hong Kong compete for business. Hong Kong’s “one country, two systems”—its status as part of China but independent—is its main selling point, according to Hui. He mentioned a Hong Kong-China acceleration program.
Officials emphasize Hong Kong’s role as a bridge between China and the world. Given China’s ban on virtual assets, Hong Kong isn’t playing this role, so what is?
“We can bring investments globally,” Hui said. “We can regulate and sustain these investments.”
Hong Kong’s credibility as a gateway to China and international community was emphasized.
“Rule of law, regulation, commercial modus operandi” are Hui’s reasons.
Hui declined to say whether the newly launched Hong Kong Monetary Fund would invest in crypto companies. “They are bound by their mandates and policies,” he said.
CoinDesk reported that companies are unsure if Hong Kong can set its own crypto policy. Hui insists.
Hui said, “it is more business as usual because after all we are operating one country, two systems,” when asked if Beijing had reassured the regulator on cryptocurrencies. Our legal and regulatory systems are ours.”
The Party Congress across the border confirmed Xi Jinping’s third term last month. China stocks fell immediately. Hong Kong investors are worried about politics.
Hui seemed unconcerned. Hui noted that Hong Kong is an international financial center, so stock performance reflects sentiment. He reported market stability. “No systemic risk,” he said.
He even welcomes crypto companies leaving China. Hui said Hong Kong is open. “We welcome anyone who meets our laws.”
Hui said the ecosystem “blocks are ready” with the VASP regime and consultations. He called it a “more solid footing.”
Hong Kong announced its crypto hub revival at Fintech Week. The regulator said it would consider a crypto futures ETF and letting licensed exchanges serve retail customers.
Hong Kong seemed set on a professional investor-only environment until a few months ago. “Progressive,” Hui said. We move with the market and industry to mitigate risk, manage them, and grow this ecosystem.
All exchanges needed licenses, but licensed platforms couldn’t serve retail traders. Retail traders mostly use unlicensed platforms.
U.S. crypto ETFs may have more liquidity for Hong Kong investors. The announcements indicate more options.
Hui’s answers emphasize regulators’ greater openness. He avoided discussing retail investor regulations. He advised market consultation.
Hong Kong is expected to open to retail, but the rules, standards, and timeline are still unknown. He stressed investor education.
Hong Kong’s attempt to return as a crypto hub follows Terra’s crash, VC fund liquidations, and Singapore’s crypto regulation.
Hui said the timing was not random. He cited Hong Kong’s experience with an opt-in system for virtual asset exchanges and fund managers to obtain licenses to trade securities and provide automated trading services.
He said this crypto winter may have made people more critical of what works. “Reflect.”
