In response to the rising global interest in Bitcoin and other digital assets, Hong Kong’s Financial Services and the Treasury have addressed the Legislative Council’s inquiries regarding the government’s stance on cryptocurrencies. Led by Johnny Ng, the parliamentarians sent questions regarding the legal regime for digital assets, the potential inclusion of digital currencies in fiscal reserves, and the implications on Hong Kong’s economy. Acting Secretary Joseph Chan stated that the government is closely monitoring global trends and has taken preemptive steps to regulate digital currencies, aligning with the Financial Stability Board’s recommendations.
The government of Hong Kong has amended the Anti-Money Laundering and Counter-Terrorist Financing Ordinance to establish a licensing regime for virtual asset service providers (VASPs) and provide guidelines for stablecoin operations. Despite not creating a new regulatory authority for digital assets, a Task Force was formed in 2023 to oversee the adoption of digital asset regulations. Chan hinted at the possibility of adding BTC to Hong Kong’s reserves in the future and emphasized the government’s support for the tokenization of assets, issuing circulars to facilitate entry into the sector.
In South Korea, the progress of digital asset regulations, particularly securities token offerings (STOs) and real-name corporate digital asset accounts, has been significantly slowed down due to the imposition of martial law by impeached President Yoon Suk Yeol. STOs, which allow companies to raise funds through digital tokens representing real-world assets, are now facing delays until at least 2025, causing uncertainty in the digital asset ecosystem. The implementation of real-name corporate accounts, crucial for combating fraud, has also been put on hold as authorities focus on stabilizing traditional markets amid the political and economic crises.
While digital asset taxation in South Korea has been clarified until 2027 through a tax reform bill, the legislative attention has shifted away from advancing digital asset regulations. Yoon’s administration, known for its involvement in digital assets and Web3 technologies, has been embroiled in a political controversy, leading to the suspension of legislative activities and the free press. This disruption has put initiatives related to digital asset regulation in limbo, with stakeholders closely monitoring the situation for any potential resolutions in the future.
Facing the challenges brought by the political and economic crises in South Korea, the digital asset ecosystem is experiencing setbacks in advancing critical regulations such as STOs and real-name corporate digital asset accounts. The indefinite postponement of key regulatory initiatives has created uncertainty in the industry, with experts predicting delays and challenges until the situation stabilizes. With the landscape evolving rapidly, stakeholders are navigating the complex regulatory environment while keeping a close eye on developments in both Hong Kong and South Korea’s digital asset sectors.
