Secretary for Financial Services and the Treasury of the Hong Kong Government: Formulating virtual monetary policy requires balancing the needs of regulation and development

According to official news, on May 23, the Secretary for Financial Services and the Treasury of the Hong Kong Government said that the changes in virtual assets are jaw-dropping. In addition to the sharp price fluctuations, cryptocurrencies have sprung up like mushrooms after rain, and NFTs are also sold. Some people think that it is a castle in the air and a flash in the pan, while others believe that it has the potential to develop into a sustainable asset class. I can't make a conclusion without a "crystal ball". It is left to market practice to make judgments. The most important thing is to balance the needs of regulation and development. Considering the complexity of the technology behind virtual assets, the risks involved and the price volatility are different from traditional financial products, we believe that at least in the early stage of the launch of the licensing system, virtual asset service providers (VASPs) should only be allowed to serve professional investors. In addition, the proposed licensing system does not include legal tender in digital form, such as digital currencies issued by central banks. Considering that the definition of virtual assets may also change in the future, the legal framework proposed this time will provide a certain degree of flexibility, and the SFC will specify the characteristics of virtual assets. The Secretary for Financial Services and the Treasury can decide whether any digital representation of value should be defined as a virtual asset in general or in specific circumstances. We also see opportunities for Hong Kong to expand its market with its advantages in sound financial regulation, and therefore will amend the proposal to allow overseas established companies registered under the Companies Ordinance to apply for VASP licenses.