Hong Kong’s finally easing up on its strict crypto regulations in an attempt to get more trading activity happening in the city. The Securities and Futures Commission announced Monday that licensed crypto exchanges can now connect their local order books with their global platforms, which is a pretty big change.
Right now Hong Kong operates in what Elizabeth Wong from the SFC called a “closed-loop environment” that basically creates its own isolated pocket of liquidity just for Hong Kong traders. That’s been limiting growth and making it tough for big international platforms to justify setting up there.
Julia Leung, the SFC’s chief executive, said this shift brings crypto trading more in line with how traditional assets work in Hong Kong. They’re also finalizing rules for licensing crypto dealers and custodians, while the central bank plans to start issuing stablecoin licenses next year.
Down the road, Leung mentioned they’re thinking about letting licensed crypto brokers tap into global liquidity pools too. That would make it way easier for giants like Binance and Coinbase to operate in Hong Kong with just a broker license instead of going through the years-long process of getting a full exchange license.
Right now the SFC has licensed 11 crypto exchanges, with another 49 brokers allowed to provide virtual asset services. But trading volume in Hong Kong still lags far behind places like the US, which has been rapidly deregulating crypto and passed stablecoin legislation in July.
Conclusion
Hong Kong’s SFC is allowing licensed crypto exchanges to connect local order books with global platforms, moving away from a closed-loop system to boost trading activity and attract major international platforms.
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