Just days after Binance CEO Changpeng “CZ” Zhao warned of the start of increased regulatory scrutiny amid the FTX collapse, Hong Kong’s Financial Secretary called for a greater focus on transparency and proper supervision when it comes to virtual assets.
Financial Secretary Paul Chan stressed the importance of being “steadfast and cautious” in promoting the development of the virtual asset industry in Hong Kong. A poster that accompanied Chan’s post, translated as:
“While actively adopting innovation, there must be a set of regulations that adapt and keep pace with the times to properly manage risks, create prerequisites for orderly and vigorous development of the market.”
In October, the Hong Kong government published an initiative: the Political Declaration on the Development of Virtual Assets in Hong Kong, which introduces a regulatory framework and risk-based regulatory direction. In addition, the government has proposed several pilot initiatives to test and improve the technologies that power virtual assets.
According to Chinese journalist Colin Wu, Chan’s message can be considered a manifesto to welcome crypto companies from all over the world. In their words,
“The Hong Kong Financial Secretary said that due to the bankruptcy of FTX, transparency and proper supervision must be strengthened.”
Chan was not offended by the collapse of FTX. Instead, he highlighted the importance of maintaining security and properly managing risksexplaining that:
“We must not only make the most of the potential that innovative technologies bring, but also be careful about the fluctuations and possible risks that they may cause, and prevent these risks and impacts from being transmitted to the real economy.”
Also, his advice to crypto businesses was to keep separate accounts to hold client assets. As Wu pointed out, Chan also recommended crypto firms set aside actual operating expenses for at least 12 monthsamong other requirements.
As a final note, Chan reiterated that a stable and sustainable cryptocurrency industry would become a reality with transparent operations and adequate and proper supervision.
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