Hong Kong faces an uphill battle to keep things in the virtual asset industry, experts say, as US President Donald Trump unveils digital asset policies aimed at the US “crypto capital of the planet”.
On Friday, Trump signed a long-awaited executive order to develop the U.S. digital asset sector, with measures including the creation of a task force tasked with advising the White House on crypto regulations and the rescinding of previous orders that he said had “stifled innovation.”
The executive order, letting the industry know that the Trump administration is “180 degrees in favor of cryptocurrency inclusion,” will add challenges to Hong Kong’s virtual asset goal, particularly in attracting international talent, Stephan said Stephan Lutz, CEO of Cryptocurrency Exchange Bitmex.
The previously hostile environment for cryptocurrencies in the US has partly made Hong Kong “one of the few very vibrant and quite successful hubs for international cryptocurrencies in Asia,” he said.
The Hong Kong flag and stacks of Bitcoin tokens are shown in this illustration image. Photo: Shutterstock images alt = The Hong Kong flag and stacks of bitcoin tokens are shown in this illustration image. Photo: Shutterstock images>
“Hong Kong will face — not today, but after people have gained confidence in the Trump administration’s actions — way more headwinds for its crypto industry,” Lutz said.
Hong Kong set out its ambition to become a global hub for virtual assets in late 2022, and has front-loaded a series of initiatives over the past two years, including a licensing regime for crypto exchanges, exchange-traded funds that directly track bitcoin and ether, and the introduction of legislation about Stablecoins.
The city is being crossed now”adapt“The proposal to regulate over-the-counter virtual asset trading after receiving market feedback will also introduce a licensing regime for crypto custodial services next year,” said Joseph Chan, acting secretary for financial services and treasury, in a statement in December.
Days into the Trump administration, the US Securities and Exchange Commission has already made a move that could potentially take the wind out of Hong Kong’s sails.
The U.S. regulator on Thursday repealed the controversial accounting guidance known as SAB 121, which saw U.S. firms hold crypto assets in custody for clients to record the liability on their balance sheets, making it “economically prohibitive” for them to provide such custody solutions, according to Andrew Fei , a partner at King & Wood Mallesons in Hong Kong.
