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Hong Kong Treasury Confirms Crypto Is Not a “Target Asset” for Its Exchange Fund

The Hong Kong Treasury Department has clarified its stance on cryptocurrencies, stating that while the nation’s Exchange Fund currently holds a small number of crypto assets, these digital currencies are not considered a “target asset” for investment.

Hong Kong’s Approach to Crypto Holdings
In a recent exchange, Hong Kong Councilor Johnny Ng proposed that the government integrate cryptocurrencies into its fiscal reserves. Ng suggested that the Hong Kong Exchange Fund, traditionally tasked with defending the Hong Kong dollar and managing foreign exchange assets, could allocate a portion of its holdings to crypto investments.

However, Secretary for Financial Services and the Treasury, Joseph Chan, countered Ng’s proposal in a written response. Chan emphasized that crypto assets do not align with the Exchange Fund’s primary investment objectives. He did, however, acknowledge that a small proportion of the Fund’s capital, managed by external investment managers, is placed into crypto assets. This allocation remains modest and does not represent a shift in the Fund’s core investment strategy.

Regulatory Evolution and Cautious Adoption
Despite the limited direct involvement in crypto by the Exchange Fund, Hong Kong continues to explore the broader digital asset environment. The government issued the “Policy Declaration on the Development of Virtual Assets in Hong Kong” in October 2022, underscoring a commitment to a fair and principles-based regulatory approach—“same business, same risks, same rules.”

Furthermore, authorities have introduced a licensing framework for Virtual Asset Service Providers (VASPs) via amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. This ensures crypto exchanges and platforms meet international standards and implement robust consumer protection measures.

While no specifics were provided regarding the acceleration of Hong Kong’s crypto regulations, Chan acknowledged both the innovation and complexity that virtual assets bring to the financial system. Hong Kong’s ongoing efforts to refine its regulatory landscape reflect its aim to balance growth, innovation, and investor safety within the rapidly evolving global crypto industry.

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