Updated on January 9, 2023 12:51 PM
According to the senior financial officer of the government, investors now perceive regulations to be more appealing in the aftermath of FTX's collapse. Thus the most recent cryptocurrency fall has not diminished Hong Kong's will to become a center for virtual assets.
Without mentioning any names, Hong Kong Financial Secretary Paul Chan wrote in a blog post on Sunday that the industry has become even more convinced of the need for greater platform transparency and regulatory compliance as a result of the collapse of cryptocurrency-related businesses "one after another," including a sizable bankruptcy last week.
"Our policy statement released recently is conducive to building such an environment, and has made the industry very hopeful about the development of Hong Kong's virtual asset market."
He further stated, "While actively embracing innovation, there must be a regulatory package that adapts and keeps pace with the times to manage risks properly, and create prerequisites for the orderly and vigorous development of the market."
Chan further asserted that since mid-2022, cryptocurrency assets have fallen sharply, and businesses connected to them have shut down throughout the globe. For instance, the most recent news of a defunct crypto company concerned the prominent exchange FTX. The market said that there was a discrepancy that represented the winter season in the industry; as a result, it was obvious that steps were being taken to create transparent techniques.
According to Paul Chan, several experts have highlighted that the use of blockchain has created a decentralized network world, web3.0, which is the essential building technology driving the Metaverse and enables organizations or individuals to use NFT in performing direct peer-to-peer transactions. And, as the industry is growing to Billions, there's a need for regulatory frameworks.
In October, the Hong Kong government came out with a strategy known as the Policy Declaration on the Development of Virtual Assets in Hong Kong, creating a legal framework and risk-based regulatory direction. Additionally, the government unveiled various initiatives to evaluate and enhance technologies that manage virtual assets.
Colin Wu, a Chinese reporter, backed the Hong Kong Financial Secretary's remarks and claimed that Paul's article might serve as a call to action for cryptocurrency businesses worldwide.
Additionally, he urged crypto firms to keep client funds in various accounts. Among many other recommendations, Chan recommended crypto exchanges hold onto operational expenditures for at least a year.
Finally, the secretary said that a stable and long-term crypto sector would eventually become a reality with transparent operational procedures and enough proper oversight.