Hong Kong has set its sights on becoming a major crypto hub as the region actively promotes the development of Web3. 

The Securities and Futures Commission (SFC), the country’s main financial regulator, is ostensibly accompanying this ambition with plans to regulate the crypto space by granting licenses for retail crypto exchanges. 

As of late, Hong Kong has also taken certain measures that further strengthens its position as a major player in the Web3 space. 

On June 30, the Hong Kong government announced the establishment of a task force dedicated to ethically promoting the development of Web3 in the region. 

Comprising of 11 government officials and 15 industry participants, the team aims to foster growth and innovation in the crypto sector. 

Furthermore, the SFC has been awarding licenses to exchanges in accordance with its new crypto licensing regime.

Under the new rulebook, the city-state will also allow retail investors in the city to trade specific “large-cap tokens” on licensed exchanges, given that safeguards such as knowledge tests, risk profiles, and reasonable exposure limits are put in place.

In a recent interview, Animoca Brands co-founder and executive chairman Yat Siu said he expects an increase in “events, activities, and companies choosing Hong Kong as their Web3 headquarters.”

Siu believes that the recent approvals demonstrate the government’s commitment, stating that Hong Kong is creating a favorable environment to Web3 projects.

Likewise, Matthew Cheung, the chief strategy officer of the Hong Kong Virtual Asset Exchange, one of the first to receive in-principle approval from the SFC, has said the SFC’s proactive approach and transparent framework provide development opportunities for exchanges that comply with regulations. 

Banks in Hong Kong Remain Hesitant About Crypto Clients

Despite progress in the regulatory landscape, large banks in Hong Kong have been reluctant to engage directly with crypto clients. 

As reported, Hong Kong’s banking regulator has even exerted pressure on banks including HSBC, Standard Chartered, and Bank of China to engage with crypto clients.

The HKMA told the banks back in June that due diligence on such potential customers should not “create undue burden,” particularly “for those setting up an office in Hong Kong to look for the opportunities here.”

Siu claimed that this demonstrates the government’s commitment to supporting the establishment of crypto projects in the region. 

He also noted that many portfolio companies have successfully established bank accounts in Hong Kong, advising companies facing difficulties to engage with organizations like InvestHK, a government department dedicated to assisting foreign companies entering the region.

It is worth noting that Hong Kong’s approach to crypto is in sharp contrast to that of US regulators, which have ramped up their scrutiny of the industry following the collapse of FTX and other high-profile crypto companies.