Lawmaker: Hong Kong Must Reform Crypto Rules, Learn from UAE and South Korea
Hong Kong lawmaker Johnny Ng urged a revamp of the city’s cryptocurrency regulation at Consensus Hong Kong, recommending lessons from the United Arab Emirates and South Korea. Ng—who sits on Hong Kong’s Legislative Council and China’s CPPCC National Committee—argued that clearer, more unified frameworks attract institutional capital and reduce uncertainty. He noted Hong Kong’s current hybrid model (Securities and Futures Commission licensing plus multiple oversight bodies) creates overlapping supervision and bureaucratic friction. From the UAE, Ng highlighted the benefits of zone-based single regulators such as Dubai’s VARA and ADGM’s framework: explicit rules, a single licensing contact point, and agility that has drawn major exchanges. From South Korea, he cited centralized government-led regulation (Financial Services Commission/FSS) and the Digital Asset Basic Act’s focus on investor protection, reserve requirements, real-name banking and AML—measures that restored public trust and mainstream adoption. Analysts see two converging global models: specialist dedicated regulators and empowered traditional financial regulators. For Hong Kong, Ng recommends integrating elements of both—streamline oversight, clarify responsibilities, and strengthen transparency for custody and reserve practices—to maintain competitiveness as a gateway to mainland China. The piece notes regulatory clarity correlates with higher registered virtual asset providers and foreign investment. The article concludes that Hong Kong must adapt to secure its position as a fintech hub.
Neutral
The news is neutral for market direction because it signals potential regulatory improvements rather than imminent restrictive or expansionary policy. Johnny Ng’s recommendations—streamlining oversight and strengthening investor protections—are aimed at reducing uncertainty, which is typically positive for institutional inflows over the medium to long term. However, proposed measures inspired by South Korea (strict reserve rules, real-name banking, AML) could impose higher compliance costs on exchanges in the short term, possibly suppressing trading volume or raising spreads temporarily. The UAE-style single-regulator approach could ultimately attract listings and liquidity if implemented, but such structural reform takes time and requires legislative action. Historically, clearer regulation (e.g., after Korea tightened rules in 2018–2020) improved institutional participation and price stability but caused short-term operational strain on exchanges. Therefore, traders should expect potential short-term volatility around regulatory announcements and licensing changes, with a neutral-to-mildly bullish medium-term outlook if reforms increase clarity and capital inflow.