The Hong Kong SCMP editorial summons adequate cryptocurrency regulation in the wake of FTX’s massive collapse.
Hong Kong requires crystal clear definitions in place to treat digital forms of stocks, bonds, NFTs, ETFs, Bitcoin, and other tokens, SCMP reasons.
The ongoing cryptocurrency crisis makes it apparent that the sector needs to fall under the purview of reasonable regulations.
But Hong Kong’s Financial Secretary, Paul Chan Mo-po, still believes cryptocurrencies and virtual assets are “unstoppable.”
Hong Kong-based AAX or Atom Asset Exchange is also reported to have suspended withdrawals altogether. AAX’s management team is unreachable, and the magnitude of financial losses is unknown.
An official statement from AAX, “no funds have been compromised,” fails to restore investor confidence.
While FTX retreating from Hong Kong was good news, the exposure of local investors to AAX may come to haunt.
But Hong Kong should keep in mind that Temasek’s FTX compelled them to write-down US$275 million (or 1% of its net portfolio value of US$293.97 billion, as of March 31).
But these events will not stop Hong Kong from pursuing the innovation dream. The government of Hong Kong is willing to welcome “virtual assets” with open arms.
There are pertinent innate risks in these assets, such as financial stability risk, consumer protection, money laundering, and terrorist financing concerns. So, proper regulation is a must for these virtual assets to grow and investors to prosper.
Chan supports the approach of
same business, same risk, same rules.
Supervision, better management, and risk-weighted capital allocation, should be followed as golden rules when dealing with public money.