In February, Hong Kong proposed a welcome set of rules to regulate crypto-related activities. Under the new regulatory regime, retail investors can trade certain digital assets on licensed exchanges, replacing the 2018 framework that restricted trading only to recognized investors.
The city is also paving the way to legalize stablecoins. A startup backed by popular exchange KuCoin and issuer USDC Circle recently launched an offshore yuan-pegged stablecoin (CNH), the currency first of its kind in Mainland China.
To create an enabling environment for web3 businesses, the city facilitates communication between banks and crypto startups, many of which are scrambling to find alternatives in the wake of the crisis of Silvergate Bank.
Meanwhile, the tightening of regulation in the United States following the FTX boom has some consequences. US legislators, especially the SEC, are constantly taking legal action against crypto companies. In the past, several US banks played a crucial role in linking the traditional and crypto worlds, but that link has now been broken, which presents an excellent opportunity for Hong Kong to step up.
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