Hong Kong reaffirms pledge to regulate ‘cryptocurrency’ and stablecoins amid surge in crime

The Hong Kong government plans to submit a draft bill this year to regulate digital assets, amid a surge in ‘cryptocurrency’ crimes over the past three years, a senior official said.

Financial Services and Treasury Board (FSTB) Secretary Christopher Hui said the top financial regulator is consulting the public on the digital asset bill, which covers virtual asset service provider (VASP) licensing, trading, OTC desks and stablecoins. .
rationing. He was answering questions from members of the Legislative Council about the government’s handling of digital assets.

Last February, the FSTB launched a public consultation on OTC desk oversight, Hui told lawmakers. The proposal includes giving jurisdiction to the Commissioner of Customs and Excise over the sector, including the power to issue licenses.

Separately, FSTB has been working with central banks on legislative proposals for stablecoins. The pair launched a public consultation in December last year proposing that all stablecoin issuers obtain a license from the Hong Kong Monetary Authority (HKMA). Only licensed issuers can provide services to Hong Kong investors.

“Based on the results of the consultation and the progress of the preparatory work, the government will submit the bill for the above licensing system to the Legislative Council as soon as possible,” Hui said.

While the government acknowledges the need for new legislation, Hui noted that Hong Kong is a global leader in ‘cryptocurrency’ regulation.

“In fact, Hong Kong is one of the first few jurisdictions to adopt a comprehensive framework to regulate VA activities from an investor protection perspective,” he told lawmakers.

But Hong Kong’s digital asset-related crimes have surged over the past three years, in stark contrast to the regulatory dominance expressed by Hui.

As he revealed, the number of ‘cryptocurrency’ crimes surged from 1,397 in 2021 to 3,415 last year. Losses to digital asset fraudsters increased fivefold, from $105 million in 2021 to $562 million in 2023.

Despite the worrying numbers, Hui told lawmakers that police had arrested hundreds of suspects and were working with other authorities to crack down on ‘cryptocurrency’ crime.

Watch: Cryptocurrency Regulation Will Make Life Easier for BSV

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