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HashKey Launches Wealth Management Platform for Institutional Investors

Hong Kong-based digital asset firm, HashKey Group, has launched a new wealth management platform aimed at professional and institutional investors. The move comes in response to a growing demand from investors seeking access to virtual assets. The platform will allow the group to offer solutions to help tap into the “growing opportunities of virtual assets.”

HashKey’s venture capital arm, HashKey Capital, is the first to benefit from the new platform. It will manage portfolios that only contain virtual assets. The company was granted a “Type 9 asset management license” by Hong Kong’s Securities and Futures Commission, which likely paved the way for its latest offering.

The launch of the wealth management platform comes after HashKey closed a $500 million investment round for a fund that aims to push for mass adoption of blockchain and crypto technologies. The move highlights the company’s commitment to driving the adoption of digital assets.

According to a 2022 study from consultancy firm Boston Consulting Group, only 0.3% of individual wealth is invested in crypto, compared to the 25% invested in equities. However, HashKey believes there is “potential robust demand for virtual assets in the future.”

In addition to launching the new platform, HashKey is expanding its over-the-counter trading service. The company plans to increase the number of tokens in its spot market and increase its liquidity coverage to 24/7. The move is a response to recent challenges in the crypto market, which have highlighted the need for deep and reliable liquidity.

HashKey’s move into the wealth management space comes as institutional investors continue to explore the potential of digital assets. Many are looking for ways to gain exposure to the emerging asset class, which has been one of the best-performing asset classes in recent years.

Overall, HashKey’s launch of a wealth management platform for professional and institutional investors is a significant step forward for the digital asset industry. The move highlights the growing demand for virtual assets and the increasing interest from institutional investors seeking exposure to the emerging asset class. With its new platform and expanded over-the-counter trading service, HashKey is well-positioned to capitalize on the growing interest in digital assets.

Hong Kong Monetary Authority Explores Virtual Asset Regulation in UAE and Highlights Converging Global Standards

According to a report by Ming Pao, the Hong Kong Monetary Authority (HKMA) recently visited the United Arab Emirates (UAE) to discuss the regulation of virtual assets (cryptos) with the local central bank. HKMA Chief Executive Eddie Yue shared that both regions have begun developing virtual assets within regulated environments, with Hong Kong having introduced regulatory frameworks earlier than the UAE.

Yue also mentioned the recent strengthening of virtual asset regulation in the United States, raising questions about whether other jurisdictions, including Hong Kong, would follow suit or adopt a more relaxed approach. He noted that in the past, Hong Kong had stringent regulations on virtual assets, bordering on prohibition, while regulations in other regions were relatively unclear. However, there is now a global trend towards converging regulatory standards, which will help minimize potential discrepancies in the future.

Eddie Yue also discussed the challenges faced by virtual asset exchanges in Hong Kong when it comes to opening bank accounts. Yue acknowledged that there have been ongoing discussions between the HKMA and local banks regarding this issue. He mentioned that the perception of pressure during these discussions varied among different parties. Yue explained that while the United States previously lacked clear regulatory requirements for virtual assets, places like Singapore and Dubai had regulations in place, particularly targeting functions such as anti-money laundering. Hong Kong, after learning from experiences such as the closure of FTX, has gradually opened up its regulatory approach, aiming for strict yet clear guidelines. The banking industry is encouraged to continuously update its understanding and seek regulatory clarity from authorities.

Hong Kong IFEC Warns Against Trading on Illegal and Foreign Platforms for Virtual Assets

The investor and Financial Education Council (IFEC), a public organisation under the Securities and Futures Commission (SFC), has issued a warning regarding the potential risks connected to unlicensed and foreign virtual asset trading platforms. In reaction to the growing acceptance of virtual assets, which, despite their attraction, present a high-risk investing opportunity, this advise has been offered.

The SFC has yet to authorise any platforms that can provide services to retail investors after the new regulatory framework for virtual asset trading platforms goes into effect on 1 June 2023. Investors are advised to remain cautious of the inherent dangers by IFEC, which emphasises that the bulk of these platforms that are now accessible to the public are still unregulated by the SFC.

Investors may be exposed while trading on unregulated sites. Investors may not be protected from potential dangers by such platforms’ lack of operational transparency and defined procedures. Many platforms, according to IFEC, have disclaimers that release them from liability even if they misplace investors’ virtual assets.

The IFEC also clarified potential problems brought on by disagreements between investors and platforms. Investor complaints might have few options if there is no regulatory scrutiny. Furthermore, it’s possible that the SFC won’t be able to help. The IFEC stressed that instances of fraud, security lapses, theft, or an abrupt halt to operations could result in the complete loss of virtual assets held on these platforms.

Although they might be registered or licenced with foreign regulators, offshore platforms can carry hazards. Investor protection may be compromised by some governments’ inadequate regulatory practises. Furthermore, because of their cross-border character, seeking out complaints or support abroad can be difficult. Investors may face an uphill struggle to make claims and seek legal redress if such platforms close or cease operations, the IFEC cautioned. Furthermore, local law enforcement and authorities might not be able to help if these sites have no relationship to Hong Kong.

The Hong Kong Special Administrative Region (HKSAR) needs more financial literacy, which the IFEC has long pushed for. It seeks to shield clients from the dangers of unregulated virtual asset trading platforms through this guidance, assisting them in making more knowledgeable and secure investment decisions.

Hong Kong's Crypto Rise: Harbinger for China?

Eastern Asia has seen its cryptocurrency market dynamics shift significantly, with a notable decline in crypto activity over recent years, primarily attributed to China’s restrictive stance. However, a wind of change may be blowing from Hong Kong, as the region experiences a surge in crypto-related initiatives and regulatory friendliness, igniting speculations regarding China’s evolving digital asset outlook, according to Chainalysis.

The Eastern Asia Crypto Landscape: An Overview

Eastern Asia, accounting for 8.8% of the global cryptocurrency activity from July 2022 to June 2023, has historically been a significant player in the crypto arena, largely driven by China’s previously bustling crypto trading and mining sectors. Despite the drop in activity, the region still holds a considerable share in the global crypto market, albeit less driven by institutional activity compared to larger markets. The region has displayed a higher inclination towards Decentralized Finance (DeFi) than similarly sized markets like MENA and Latin America.

Hong Kong: The Rising Crypto Hub

Hong Kong has emerged as a potential harbinger of crypto rejuvenation in the region, especially with its burgeoning status as a crypto hub. With an impressive $64.0 billion in crypto received between July 2022 and June 2023, Hong Kong’s activity isn’t far behind China’s $86.4 billion, a noteworthy feat given the vast population difference. The city’s lively Over-The-Counter (OTC) market, facilitating large, private transfers for institutional investors and high net worth individuals, has been a major driver of this crypto influx.

Institutional and Retail Dynamics

The crypto scene in Eastern Asia portrays a mixed bag of institutional and retail dynamics across different countries. For instance, South Korea’s crypto market appears to be the least institutional-driven due to stringent local regulations, whereas Japan aligns closely with global averages concerning retail versus institutional transaction breakdown. Unlike South Korea, Hong Kong sees a considerable share of its transaction volume from large institutional transactions, a characteristic that sets it apart from other countries in the region.

Crypto Platform Preferences: A Regional Perspective

A closer look at the most-used crypto platform types unveils intriguing regional trends. While Japan reflects a balanced activity between centralized exchanges and DeFi protocols, South Korea leans heavily towards centralized exchanges. The aftermath of TerraLuna’s misfortune and the subsequent regulatory revisions could have bolstered South Koreans’ trust in centralized exchanges. In contrast, China and Hong Kong exhibit unique crypto platform dynamics, with a significant amount of activity presumed to occur through OTCs or grey market peer-to-peer channels.

Decoding Hong Kong’s Crypto Surge: Implications for China

The speculation surrounding China’s warming stance towards cryptocurrency is further fueled by recent developments in Hong Kong. The Special Administrative Region has not only been fostering a conducive environment for crypto trading but also witnessed state-owned Chinese entities launching crypto-centric investment ventures. The burgeoning crypto market in Hong Kong, coupled with China’s indirect support towards Hong Kong’s digital asset initiatives, might hint at an exploratory approach by the Chinese government towards understanding digital assets better, without having to alter mainland policies drastically.

Hong Kong’s Progressive Steps Towards Web3 Adoption

Cyberport, a digital community in Hong Kong, emphasized the power of Web3 in the entertainment sector during a three-day annual event, showcasing local enterprises leveraging Web3 technology.

HKD 50 million was allocated to Cyberport to foster a thriving Web3 ecosystem, attracting businesses and talent, and organizing related educational and promotional events.

Hong Kong began tokenizing green bonds as part of its green finance initiatives, showcasing financial innovation.

The establishment of the “Task Force on Promoting Web3 Development” on June 30th, 2023, led by Financial Secretary Paul Chan, aims to promote the sustainable and responsible development of Web3 in Hong Kong.

Hong Kong’s crypto uptrend and regulatory receptiveness could potentially be harbingers of China’s cautious yet evolving stance towards digital assets. While the exact implications for China remain veiled, Hong Kong’s thriving crypto market is undeniably reshaping the regional crypto narrative, possibly laying down a framework for broader digital asset acceptance in the near future.

Hong Kong's SFC Sets 2024-2026 Agenda: Emphasis on Tokenization and Virtual Asset Innovation

The Securities and Futures Commission (SFC) of Hong Kong recently released its Strategic Priorities for the years 2024 to 2026. This document outlines a comprehensive strategy aimed at advancing Hong Kong’s securities markets, mitigating risks, and enhancing investor protection against the backdrop of a dynamic global financial landscape.

Key Focus Areas

The SFC’s strategic plan is anchored on four key areas:

Maintaining Market Resilience: The SFC aims to fortify Hong Kong’s financial market infrastructure to support sustainable growth. This involves addressing emerging risks, enhancing risk management among market intermediaries, and improving enforcement tools to detect and counter misconduct.

Enhancing Global Competitiveness: Hong Kong is set to leverage its unique position as a gateway to Mainland China, aiming to broaden its investor base, enhance IPO fundraising capabilities, and improve market liquidity. This approach is in line with the SFC’s objective to strengthen Hong Kong’s role in RMB businesses and risk management, contributing to national development and financial security.

Embracing Innovation and Tokenization: The SFC plans to advance Hong Kong’s position in virtual assets, tokenization, and sustainable finance. Key initiatives include advancing the regulatory framework for virtual asset trading platforms and expanding tokenization of traditional products to enhance investor protection.

Boosting Institutional Resilience and Efficiency: The SFC is focused on enhancing operational efficiency, cyber resilience, and ensuring adequate financial resources to meet its regulatory responsibilities effectively.

Chairman’s and CEO’s Perspectives

Tim Lui, Chairman of the SFC, emphasized the Commission’s readiness to respond robustly to new regulatory challenges both locally and internationally, shaping market developments. Julia Leung, the CEO, highlighted the SFC’s commitment to protecting investors from financial crimes and achieving positive regulatory outcomes using a comprehensive range of tools and resources.

Technological Transformation

A significant part of the SFC’s strategy involves embracing technology and Environmental, Social, and Governance (ESG) initiatives. This includes fostering a responsible fintech ecosystem and combating greenwashing, while nurturing sustainable finance talent.

Conclusion

The SFC’s Strategic Priorities for 2024-2026 mark a pivotal step in aligning Hong Kong’s financial sector with global trends and challenges. By focusing on resilience, competitiveness, innovation, and efficiency, the SFC is well-positioned to enhance Hong Kong’s status as a premier global financial hub, ensuring market integrity and investor protection.

Over 220 Web3 Companies Settle in Hong Kong, Boosting Virtual Asset Development

In a recent speech at the opening ceremony of the “2024 Hong Kong Web3 Carnival,” Deputy Secretary of the Financial Services and the Treasury Bureau, Edmond Huang, highlighted the government’s efforts in modifying relevant laws to bring over-the-counter (OTC) trading of virtual assets under formal regulatory oversight. The government also plans to allow intermediary institutions to offer a range of virtual asset services, including futures and exchange-traded funds (ETF) trading. Huang emphasized that Hong Kong will continue to collaborate with industry participants to provide deeper insights and drive the development of the Web3 industry.

Prominent investor Cathie Wood, founder of ARK Invest, praised Hong Kong’s rapid progress in blockchain technology development, stating that the potential of blockchain goes beyond the price of virtual assets themselves. Wood also expressed optimism about the application of artificial intelligence (AI) and blockchain in the gaming industry. She reiterated her institution’s prediction that the price of Bitcoin could reach $1.5 million by 2030, citing the recent approval of mainstream institutions issuing spot Bitcoin ETFs by the US Securities and Exchange Commission. Wood praised Hong Kong’s regulatory advancements in the cryptocurrency sector, noting that the development of blockchain technology in Hong Kong has outpaced that of the US.

Lu Weiding, Chairman of Wanxiang Group, highlighted Hong Kong’s emergence as one of the international centers for virtual assets. He praised the city’s progress in the virtual asset industry over the past two years.

The Hong Kong government’s efforts to attract Web3 companies and promote virtual asset development align with its commitment to establishing a comprehensive and clear regulatory framework. With the increasing presence of Web3 companies in Hong Kong, the city is positioning itself as a key player in the global blockchain and virtual asset landscape.