• Hong Kong’s Securities and Futures Commission (SFC) has taken a new approach to regulating the crypto industry.
• This could attract more capital to digital assets in the ecosystem, positioning Asia at the forefront of the next digital asset revolution.
• Asian exchanges have benefited most from 2021 bull run, but have lagged behind other regions due to China’s ban on digital assets.
Hong Kong Takes New Approach To Crypto
Hong Kong’s Securities and Futures Commission (SFC) has announced a new approach to regulate the crypto industry which could bring a new wave of capital to the largest digital assets in the ecosystem. On Monday, Hong Kong made clear its intentions to open the door for crypto trading in Asia which appears to be a completely different approach than that taken by the U.S. Securities and Exchange Commission (SEC).
Capital Inflow Could Boost Asian Exchanges
Digital asset market data provider Kaiko weighed in on this matter, suggesting that foreign investments could bring economic growth for the region as well as benefit Asian exchanges who benefited most from 2021’s bull run. The influx of new capital into Hong Kong and Asia could mean an increase in trading volumes and prices of crypto assets in these markets.
What Assets Will Be Eligible?
The SFC’s proposal would allow trading for “largest cap virtual assets” that are included in at least two approved indices such as Bitcoin Cash, Litecoin, Polkadot, Ethereum among others. The perpetual futures markets reacted positively with increased open interest for these tokens which suggests that they could see renewed flows from Asia soon.
Why Is Hong Kong Opening Up?
Kaiko analyst Conor Ryder suggests that given all the enforcement actions taken by SEC, now is perfect time for Hong Kong to strike and welcome crypto business into their jurisdiction. This move could benefit both investors and regulators alike who can enjoy better liquidity options through regulated avenues while keeping an eye out for any fraudulent activities or market manipulation attempts within these platforms.
Ultimately it is yet too early tell how much this news will impact cryptocurrency markets however it does appear positive news overall as it shows growing acceptance of digital assets by more traditional financial institutions which should help draw more institutional money into cryptocurrencies over time