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Crypto investors have criticized the proposal made by Hong Kong’s Financial Treasury and the Treasury Bureau that would limit crypto investing to people with around $1 million portfolios. Critics pointed out that if passed into law, it would exclude more than 90 percent of the city’s population effectively banning retail traders from investing in the asset class.
FSTB Secretary Christopher Hui recently defended the proposal in a speech delivered at StartmeupHK virtual fintech summit on Thursday. Hui argued that imposing mandatory requirements is in line with the government’s plans to regulate the crypto market.
Hui emphasized the need to regulate the crypto space for investor protection. “The Government sees both risks and opportunities from this new trend, and we are of the view that a proper regulatory system could facilitate development and at the same time protect investors and adhere to international regulatory standards,” he stated.
After months of consultation, which started in November last year, the FSTB issued a proposal that would ban retail crypto trading and set up strict regulations for crypto exchanges, according to Cointelegraph. Part of the proposal, which will be presented before Hong Kong’s legislature, is FSTB’s recommendation to put a minimum threshold of around $1 million worth of portfolio for crypto investors.
Many criticized the proposal as it would exclude around 93 percent of Hong Kong’s residents from participating in the crypto market. However, Hui argued that the mandatory requirement is actually good for investors and for Hong Kong.
“Imposing mandatory requirements to protect investors, prohibit market manipulation, and guard against money laundering and terrorist financing, we believe the proposed regime will further facilitate development of the virtual assets industry in Hong Kong, leveraging our world-class regulatory framework,” the FSTB Secretary said.
However, crypto exchanges say that the proposal could backfire. By restricting crypto trading to the rich, retail investors might be forced to use unregulated platforms to do their trades.
“Restricting cryptocurrency trading to professional investors only is different to what we have seen in other jurisdictions such as Singapore, the UK, and the US, where retail investors can buy and sell virtual assets,” Global Digital Finance’s Advisory Council chair Malcolm Wright said back in February. Global Digital Finance, an industry body opposed to the proposal, is composed of Hong Kong’s crypto exchanges such as Coinbase, OKCoin, BitMEX, and Huobi.
