HashKey Exchange Claims Hong Kong to be a Future Catalyst for Digital Asset Retail Markets
In Brief
HashKey Exchange analysts say the new Hong Kong circular will boost digital asset and STO markets for local firms and banks.
The latest release from the Hong Kong Securities Regulatory Commission presents an invigorating shift in the city’s stance on digital assets. Dubbed the “Joint Circular on Intermediary Activities Related to Virtual Assets,” this document signifies promising developments in the world of securities, banking, and cryptocurrency.
Analysts at HashKey Exchange highlight that the newly minted circular is set to drive significant growth in the digital asset retail markets and the Security Token Offerings (STO) for securities firms and banks in Hong Kong. These updates come with the promise of a significant influx of funds, especially crucial given the current liquidity constraints plaguing the crypto market.
- ATS (Alternative Trading System): The circular encourages traditional intermediaries like brokers and banks to partner with virtual asset trading platforms that have the nod from the Securities and Futures Commission. This move is projected to enhance the flow of securities and banking assets into the crypto sector.
- Security Token Issues (STO): A clear directive in the circular indicates that brokers and banks can now venture into the sale of “other complex products,” which includes security tokens. Such an advancement is likely to buoy liquidity within STOs, unveiling new vistas for businesses in this niche.
- Leverage and Contracts: With the inclusion of futures contracts and leveraged trading in the circular, professional investors can broaden their horizons. Intermediaries must ensure that clients understand the inherent risks of leveraged trading and have the necessary financial strength to meet their commitments.
Further, the comprehensive account services offered by HashKey Exchange, which includes features like customizable comprehensive accounts and FIX APIs, will facilitate virtual asset trading services for securities firms and their clientele.
Historical Context
To fully appreciate the magnitude of these developments, it’s essential to revisit the past. Back in 2018, the China Securities Regulatory Commission placed restrictions on virtual asset activities, limiting them to “professional investors only”. The recent adjustments not only reflect the rapid evolution of the virtual asset landscape since then but also underscore the desire to integrate these assets into mainstream finance.
Both the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have been attentive to the increasing interest from intermediaries in virtual asset distribution. This circular demonstrates their dedication to updating policies according to market dynamics and safeguarding retail sales.
Regulatory Perspectives
Despite the growing popularity of virtual assets worldwide, regulatory environments remain varied. Risks identified by the Securities and Futures Commission in 2018, such as the absence of stringent supervision for virtual asset-related product providers, are still relevant today.
Considering the intricacies and potential pitfalls of this domain, intermediaries must ensure their clients understand the risks involved, particularly in areas like leveraged trading. The onus is on them to guide clients through the complexities of the market and ensure that they have the financial means to shoulder potential losses.
This landmark circular sets the stage for a new era in Hong Kong’s digital asset landscape, making it an attractive hub for both investors and financial institutions looking to dive into the crypto market.
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About The Author
Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
