The Hong Kong government remains steadfast in its commitment to fostering a robust Web3 market despite the recent $165 million fraud case involving the crypto exchange JPEX. On November 2, during a keynote at Hong Kong Fintech Week, Christopher Hui, the region’s Secretary for Financial Services and the Treasury, addressed the issue head-on.
Persistence in the face of adversity
Hui was emphatic in stating that the government’s dedication to advancing the Web3 sector remains unshaken. “We’ve been asked many times whether JPEX will affect our determination to grow the Web3 market — the answer is a clear ‘no,’” Hui affirmed. This statement comes in the wake of allegations from over 2,500 Hong Kong residents. They claim they fell victim to a fraudulent scheme perpetrated by the Dubai-based JPEX. The Securities and Futures Commission (SFC) of Hong Kong has since issued warnings. JPEX was allegedly operating and promoting its services within the region without the requisite licensing.
Proactive Measures and Regulatory Overhaul: In response to the JPEX fraud case, Hong Kong has declared its intention to tighten crypto regulations. Significantly, this marks a crucial step towards ensuring a safer digital asset landscape. Furthermore, the SFC is not acting alone. They have partnered with the police to establish a task force. This team is dedicated to combating illicit activities associated with crypto exchanges. The government has also updated its policies regarding crypto sales and related requirements. Hui elaborated, “a lot of things are going on on the regulatory front.”
Expanding Regulatory Horizons: Looking forward, the Hong Kong government has ambitious plans for its Web3 market regulatory framework. The SFC is set to issue guidance on tokenized securities and the tokenization of SFC-authorized investment products. Additionally, crypto regulations will soon encompass buying and selling activities beyond those occurring on currently regulated trading platforms. Hui underscored the significance of these developments, ensuring comprehensive coverage of the crypto space.
Embracing stablecoins and industry consultation
Moreover, a joint stablecoin consultation is on the horizon. The Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau are spearheading this initiative. They are eagerly anticipating feedback from the sector, following a January HKMA discussion paper. Earlier reports from this year highlighted the HKMA’s push for banks in the region to extend services to crypto companies. Building on this, Hui disclosed plans for the HKMA to seek the sector’s input on guidelines for banks providing crypto custodial services.