The People’s Bank of China discusses global crypto regulations, highlighting Hong Kong crypto asset license management and new regulation.
The People’s Bank of China has released its “China Financial Stability Report 2024.” The report discusses the global regulation of cryptocurrencies. This spotlights Hong Kong’s research of ways to manage cyber asset licenses. Contrary to popular belief, 51 countries have banned cryptocurrencies, while some have changed their laws to regulate better.
The crypto market also went through a series of problems in 2022, the report said. But in 2023, prices and volume rebounded. In 2023, the total crypto assets market value was $1.55 trillion, which is a 10.71% increase from the total crypto assets market value reached in the previous year. Because of the riskiness of cryptocurrencies, many countries are tightening regulations towards them.
Crypto issuers have been regulated by the Securities and Exchange Commission (SEC) in the United States. The SEC rejected many Bitcoin ETFs from 2018 to 2023. Bitcoin spot ETF was approved by the SEC in January 2024. While the SEC said it approved this, it warned the investors that this does not mean that the SEC is saying that Bitcoin is a safe investment.
Hong Kong Divides Crypto Regulations into Security and Non-Security Tokens
The Crypto-Asset Market Regulation Act has been implemented by the European Union. Its purpose is to have a clear and full set of regulations for virtual assets. Full implementation is expected at the end of 2024. But even in the UK, the laws have been updated on crypto assets to fall under the Financial Services and Markets Act.
Crypto businesses in Hong Kong have developed a “dual license” system. However, it divides ‘security tokens’ and ‘non-security tokens’ and then subjects them to different regulations. Other large financial institutions like HSBC and Standard Chartered Bank are also required to supervise crypto exchanges.
As such the Financial Stability Board (FSB) created the global regulatory framework for crypto assets. The objective of this framework is to reduce variations in financial risks between countries as well as to enhance their consistency. Governments are taking action to ensure the market is well regulated—because as the cryptocurrencies become more popular, so do their risks—and they’re not willing to risk the stability of the global financial system.
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