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Analyst: Hong Kong SEC to release criteria on crypto exchanges

According to Dovey Wan , founder at Primitive Ventures, the Hong Kong Securities and Exchange Commission (SEC) is set to release a crypto exchange application guideline.

Wan said :

“Hong Kong SEC will announce detail in about an hour regarding cryptocurrency exchange application criteria. Considering Huobi has already backdoor listed on HKex, this will definitely play them a huge favor to be the first legalized Chinese crypto exchange.”

The decision of the Hong Kong SEC to establish a direction for local crypto exchanges comes after the introduction of a national blockchain initiative by the Chinese government.

Is this big for the global crypto market?

Over the past two years, ever since the official imposition of a cryptocurrency trading ban by the government of China , most traders in the region are said to have moved into the Hong Kong cryptocurrency exchange market .

Many Chinese investors trade cryptocurrencies through over-the-counter (OTC) trading platforms based in Hong Kong, by selling and purchasing stablecoins like Tether (USDT) with a slight premium.

As said by Wan, the establishment of a clear guideline for crypto exchange applications could benefit exchanges that are used by Chinese investors like Huobi .

She said:

“Huobi is an effective Chinese exchange – run by Chinese team locally in mainland serves primarily Chinese customers. They spent huge effort to re-structure into a ‘foreign company’ after the 2017 China crypto ban. And the cost of the Hkex shell is not cheap too.”

It would also grant crypto exchanges a strong legal basis to operate within Hong Kong, which could potentially solve banking services-related issues cryptocurrency trading platforms have struggled to deal with.

Still, Bitspark CEO George Harrap said that the proposal has been out for a year and that it is not thought of as an important framework by local communities.

Harrap noted :

“This proposal is been out for 1 year already. It’s opt-in, only applies to securities and limited only to institutional customers. Anyone joining also needs insurance that doesn’t exist. No bitcoin exchanges will be joining as bitcoin is not a security.”

Not just for Huobi

The guideline from the SEC is expected to positively affect most exchanges based in Hong Kong that primarily facilitate trades for investors based in mainland China , if the guideline is not restricted to institutional customers as some local analysts predict.

It also means that as cryptocurrency exchanges in Hong Kong are allowed to maintain operations on a more stable footing with clarified regulatory frameworks, it will create a more practical environment for investors in China to invest in the asset class.

However, Chinese state-owned newspaper People’s Daily reported on a column released on Nov. 4 that the government vehemently against speculation around crypto assets and that its positive stance towards blockchain development does not necessarily equate to crypto investment. The People’s Daily said:

“There is no doubt about the potential and the direction of blockchain development. Speculation has to be prevented and through a competitive environment, space for blockchain development has to be opened.”

The post Analyst: Hong Kong SEC to release criteria on crypto exchanges appeared first on CryptoSlate .

Categories: Regulation
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