Hong Kong will a leading Digital Asset Trading Centre in Asia. What precisely the Hong Kong Government and the Securities and Future Commission (SFC) have done for this period.
The Hong Kong Monetary Authority (HKMA) has granted eight virtual bank licenses and has been offering service since 2020. A breakthrough in the account opening procedure is customers only shoot a photo through their mobile and send it to the bank. The financial world highly appraises the banking and financial control system in Hong Kong. Know Your Customer (KYC) procedure in the Hong Kong Banking system has been criticized as an “old school method” and no flexibility in dealing with customers. Criticism does not mean losing control, but it should think more different ways of using technology in offering more competitive service to potential customers. Potential a new client base will be the Greater Bay Area with 100 million population customers.
SFC already pointed out Bitcoin is defined as a “commodity”, and it is legal to buy and sell Bitcoin in HK. However, in China, it is still vague to depict the Bitcoin legal status in monetary and financial position. Although it had cases in Shanghai by the court to point out that Bitcoin is an asset, no future explanation to define its legal status. Therefore, Bitcoin has its legal situation; it is still a question mark? In the US, Bitcoin has been recently described as “currency” in Washington state court.
In May, SFC has approved the first Digital Asset Management Company in HK. Regulated digital asset funds will launch out in the market soon. “Regulated” means investors are under SFC protection. By law, the asset management company submits a monthly financial report to SFC for supervision.
In August, SFC granted two security token (STO) exchange licenses. BC Group (stock code 863 HK) is one of them, and its stock price has been increased nearly a double for the past six months. It has reflected investors are very positive on a technology company in the digital asset business. The company is now offering education on what is digital assets and their risks to customers through a commercial radio program.
With STO, it will provide more and more liquidity channels for SME or estate building projects. Singapore has a regulated STO exchange as well, but the feedback is not very good, and so far not many companies are traded there.
In 2019 SFC report showed that Asset Under Manage (AUM) under HK was HK$$28,769 Billion, which highlighted a 20% increase in AUM and a 15% increased in domicile SFC authorized funds. It shows a huge potential of investors and fund managers are ready.
With full support by regulated banking services, asset management companies and security token exchange platforms, HK will be a leading Digital Asset Trading Centre in Asia.
Alex Yuen, Director
Asia Digital Asset Financial Ltd.
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