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Australian Crypto Exchange Interested in Establishing a Base in Hong Kong

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Mar 25, 2023

Independent Reserve, the prominent crypto exchange based in Australia, is eyeing opportunities to establish its foothold in Hong Kong, as the city strives to emerge as a cryptocurrency hub.

The Hong Kong Securities and Futures Commission has unveiled a proposed licensing regime for crypto exchanges, which is set to come into effect in June, in a bid to position the city as the next crypto hotspot in Asia.

According to the CEO and co-founder of Independent Reserve, the licensing regime makes Hong Kong an attractive destination for the firm to set up a new base, a prospect that the company is now actively considering.

He noted that the recent announcement by the regulators in Hong Kong does make Hong Kong look like a friendly jurisdiction.

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As the global crypto market continues to grow and evolve, more and more countries are embracing technology and its underlying principles.

With Hong Kong’s strategic location, advanced technological infrastructure, and favorable regulatory environment, it is well-positioned to become a leading crypto hub in the region.

Independent Reserve’s interest in Hong Kong as a potential expansion destination underscores the growing importance of the city in the global crypto landscape.

Crypto Licensing Framework in Hong Kong

Hong Kong-based crypto companies are now subject to a new licensing framework that demands compliance with a range of measures to ensure the secure custody of assets.

These measures include strict adherence to AML regulations, Know Your Customer KYC protocols and counter-financing of terrorism countermeasures.

In addition, companies must disclose any potential conflicts of interest and undergo regular audits to ensure continued compliance with these standards.

These new regulations aim to bolster the integrity of the cryptocurrency industry and safeguard against fraudulent activity, money laundering, and terrorist financing.

By requiring companies to adhere to robust safeguards for the custody of assets, authorities hope to instill greater confidence in the industry and create a level playing field for businesses operating in the crypto space.

While the regulatory landscape for crypto remains somewhat murky, the new licensing regime in Hong Kong represents a positive step towards greater transparency and accountability in the industry.

Could More Exchanges move to Hong Kong

According to the CEO of Independent Reserve, his team is planning a visit to Hong Kong to meet with banks and compliance experts to assess whether the location is a suitable option for the company.

He also shared his thoughts on China’s political relationship with Hong Kong, stating that he believes the Chinese government is testing a more relaxed crypto regime in Hong Kong to observe its impact on the business landscape.

If the experiment proves successful, Przelozny speculates that China may adopt a similar approach and loosen its existing restrictions on cryptocurrencies.

Tron CEO Justin Sun has also shared similar sentiments, stating that he believes China is using Hong Kong as an experiment base to make a final decision on its policy stance towards crypto.

While there is still some uncertainty surrounding the regulatory landscape for cryptocurrencies in Hong Kong and China, these comments suggest that there may be a willingness to explore more flexible approaches to cryptocurrency regulation.

As the industry continues to evolve and gain greater mainstream acceptance, it will be interesting to see how regulators around the world respond and adapt to these changes.

Despite the potential benefits of a more relaxed cryptocurrency regime in Hong Kong, Przelozny remains cautious and acknowledges that the current situation could be a transitory experiment that could be reversed in the future.

Assuming that Independent Reserve is satisfied with the regulatory environment in Hong Kong, Przelozny says that the last factor to consider would be the cost of establishing a presence in the region and the potential return on investment.

Final Thoughts

Currently, Independent Reserve operates as a licensed virtual-asset service provider in Singapore and has recently launched Bitcoin.com.au after acquiring the domain name.

As the company continues to explore new opportunities and expand its reach, it will need to carefully consider a range of factors, including regulatory compliance and potential returns, in order to make informed and strategic decisions.

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