Hong Kong licensed attorney Gilbert NG has shed light on the implications of the actions of the United States Securities and Exchange Commission (SEC) on Hong Kong’s regulatory environment. NG highlighted several key points that underline the divergent approach to cryptocurrency platforms by the SEC and its potential impact on Hong Kong’s licensing procedures.
Could stricter crypto regulations come to Hong Kong?
Their final decision could potentially impact the license application process for Binance and other platforms in the region. NG is observing the opposite treatment applied by the SEC to Binance and USDT (Tether). While the SEC has requested that Binance be completely separated from the United States, this enforcement action may have repercussions for Binance’s operations in other regions, including Hong Kong, where they may seek license approval.
Another important disparity lies in the definition of securities between the United States and Hong Kong. Some cryptocurrencies may be considered security tokens in the United States, but not in Hong Kong. Currently, Hong Kong restricts the purchase of security tokens to professional investors only, restricting access to retail investors.
Hong Kong has allowed crypto companies and exchanges to apply for licenses from June 1. The management also allowed retail investors to buy and sell top cryptocurrencies such as Bitcoin and Ethereum under the assurance of the Hong Kong Securities and Futures Commission.
Crypto regulatory differences
Since the United States does not have specific laws and regulations regulating cryptocurrencies, there is some degree of uncertainty in terms of regulatory enforcement. While the United States has taken a stricter stance characterized by lawsuits, scrutiny and vague regulatory guidelines, countries such as Hong Kong, Japan, and the UAE have taken steps to establish clear rules and compliance measures for crypto businesses.
Recently, Binance CEO CZ welcomed the First Digital USD (FDUSD) stablecoin launched by Hong Kong-based custody and trust firm First Digital. While the SEC’s stance on Binance and broader enforcement actions may impact license applications in Hong Kong, the city’s well-established regulatory framework provides a stable environment for digital asset transactions.