The Hong Kong Securities & Futures Professionals Association, an influential industry trade group, has put forth a proposal to establish an initial coin offering (ICO) portal in the city. This suggestion was included in the group’s comments on the Hong Kong’s budget for 2024-25, addressing Financial Secretary Paul Chan Mo-po and Deputy Financial Secretary Wong Wai-lun. The goal of the proposed ICO portal is to serve as a platform for conducting regulatory-compliant token offerings.
“By creating a controlled environment, authorities can mitigate risks associated with fraudulent ICOs while providing opportunities for legitimate projects to access funding,” says the Hong Kong Securities & Futures Professionals Association.
Revisiting ICOs in a Regulated Framework
Industry stakeholders, including the Hong Kong Securities & Futures Professionals Association, believe that revisiting ICOs within a regulated framework could unlock new opportunities for both investors and projects, especially with a potential bull market on the horizon. As ICOs gained significant popularity as a fundraising method since Ethereum’s launch in 2015, the ICO landscape witnessed setbacks due to numerous scams and violations of securities regulations.
- Hong Kong’s Regulatory Measures
Hong Kong, previously a thriving hub for ICO listings, implemented regulatory measures to delist many tokens. Although security token offerings (STOs), compliant ICOs that emerged later, failed to attract substantial investor interest in Asia, the industry landscape has evolved. The JPEX scandal, regarded as potentially the largest financial fraud in Hong Kong’s history, has prompted the Hong Kong government to expedite the approval process for cryptocurrency products, aiming to promote compliance in the industry.
The Potential of Integration with Banks
Financial technology solution providers have shown interest in the potential benefits of integrating tokenized platforms with banks in the future, according to OSL Compliance Exchange, a licensed virtual asset platform. This integration could leverage the public’s trust in banks, facilitating the growth of the virtual asset industry. The recent regulatory framework implemented in Hong Kong allows retail investors the ability to trade virtual assets, expanding the market beyond professional investors and traders with high net worth.
“As part of the new regulations, the SFC has also started providing licenses to crypto exchanges. OSL and Hashkey Group have become the first crypto exchanges in the city to receive licenses from the SFC,” states the article.
Furthermore, these licensed exchanges also enjoy crypto-to-fiat conversion services from ZA Bank, the largest online-only bank in Hong Kong. This partnership allows users of the trading platforms to withdraw crypto deposits in US dollars, Hong Kong dollars, and Chinese yuan. The crypto exchange Hong Kong VAEXC (VAEX) has recently applied for a virtual asset trading platform license with the SFC, suggesting continued growth and interest in the industry.
