Hong Kong’s SFC chief emphasizes the significance of crypto trading in the virtual asset ecosystem.

The CEO of Hong Kong’s Securities and Futures Commission (SFC), Julia Leung Fung-yee, talked about Hong Kong’s adoption of Web3 regulations following the collapse of the crypto exchange FTX in November last year. She emphasized that crypto trading is an important aspect of the virtual asset ecosystem.

In a recent speech, Leung reportedly explained that the new licensing system for virtual asset providers will ensure the protection of investors while considering the risks faced by financial institutions. She believes that including virtual asset providers in the regulatory system is the only way to embrace innovation and strengthen market trust after the FTX bankruptcy.

After the FTX collapse, Hong Kong used the incident to reduce regulatory risks associated with centralized exchanges. Nearly 30 days after the crisis unfolded, its legislative council included virtual asset service providers in the same legislation that governs traditional financial institutions.

Related: Hong Kong govt pressures banking giants to accept crypto clients

The new rules bring strict Anti-Money Laundering (AML) guidelines and investor protection laws to virtual exchanges looking to do business in Hong Kong. It also introduces a new licensing scheme that allows retail investors to trade virtual assets. Until recently, digital assets trading was restricted to professional investors and traders with at least $1 million in bankable assets.

Leung believes that Hong Kong’s cryptocurrency licensing system is a good example of China’s “one country, two systems” policy. While cryptocurrencies have been banned in Mainland China since 2021, Hong Kong took a different approach by promoting a welcoming environment for crypto business.

In the past year, more than 150 Web3 firms have established operations in Hong Kong’s Cyberport — a digital hub created by the local government to promote innovation. The government allocated 50 million yuan ($7 million) to speed up the development of Web3, which led to the influx of these firms.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

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