Hong Kong may be looking to recoup some of its lost luster as a financial hub.

The Securities and Futures Commission (SFC) of Hong Kong has proposed new regulations for the cryptocurrency industry (“virtual asset trading platforms”), and has requested feedback from the public. The proposed rules are set to go into effect on June 1, 2023, and include stricter guidelines for cryptocurrency trading platforms, such as licensing and investor protection measures.

Operators who do not plan to apply for a license should begin making arrangements for an orderly closure of their commercial operations in Hong Kong.

The SFC aims to ensure that virtual assets are adequately protected, key risks are effectively managed, and that exchanges and service providers adhere to stricter rules.

“In light of the recent turmoil and the collapse of some leading crypto trading platforms around the world, there is a clear consensus among regulators globally for regulation in the virtual asset space to ensure investors are adequately protected, and key risks are effectively managed,” said SFC CEO Julia Leung in a statement.

The above step is likely a part of the “red carpet for crypto businesses” that Hong Kong rolled out in October, says Bloomberg, in an effort to revitalize the battered financial center.

Significantly, Bloomberg observed that this approach perhaps has tacit approval from Beijing given the presence of officials from China’s Liaison Office at various crypto events held in Hong Kong over the past few months. These officials have been friendly, and even swapped business cards and WeChat details at these forums.

Local industry representatives have interpreted this as an indication that Beijing may be keen to observe Hong Kong’s foray into digital assets as a test, given that activity in these assets is strictly restricted on the Chinese mainland.

Related Story:  Hong Kong The New Mecca For Crypto Providers?

Image Credit: Photo by Daniam Chou on Unsplash