With financial regulators in the United States ramping up their scrutiny of the crypto industry, Hong Kong is trying to lure some of the affected entities to its shores.
On June 10, Hong Kong’s Legislative Council member Johnny Ng urged Coinbase and other global virtual asset trading operators to apply for a license of operation in the region. The lawmaker promised to “provide any assistance” to help these firms’ applications.
Hong Kong Pro-Crypto Stand
The invitation is coming on the heels of the recent lawsuit the U.S. Securities and Exchange filed against crypto exchanges, Binance and Coinbase. The regulator alleged that these firms violated federal securities law and facilitated trading of unregistered security assets.
On the other hand, Hong Kong has adopted a proactive approach toward cryptocurrencies, implementing several pro-crypto regulations to make it a choice destination for entrepreneurs in the emerging industry. Additionally, the region recently enabled retail access to digital assets like Bitcoin and Ethereum and has seen an influx of crypto firms to its jurisdiction.
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Ng’s invitation to the crypto firm reflects Hong Kong’s effort to become a financial hub for cryptocurrency in Asia. Several crypto stakeholders, like Binance CEO Changpeng ‘CZ’ Zhao and Tron Network founder Justin Sun, have highlighted how this approach could make the region a bedrock for the industry.
However, BeInCrypto reported that financial regulators in Hong Kong have warned that they would maintain strict regulatory standards for the crypto industry.
Crypto Firms Deserting US
Several U.S. crypto firms have left the country because of the unfavorable regulatory environment for friendlier jurisdictions.
Since the beginning of the year, exchanges like Beaxy, Paxful, Bittrex, CoinEx, and several others have left the U.S. market. These firms were entangled in legal conflicts with regulators, forcing them to close shops.
Despite crypto stakeholders’ complaints, the U.S. SEC chairman Gary Gensler has maintained that the current regulations in the country are enough to govern the space.
On June 8, Gensler argued that the majority of crypto tokens meet the investment contract test. As such, it should be regulated by securities law.
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