Hong Kong embraces crypto with UK-style 'sandbox' to protect startups from regulatory burdens
- Hong Kong is proposing a regulatory "sandbox" - a space for firms to innovate without regulatory burdens, Reuters reports.
- The move echoes a 2016 program by the UK's financial regulator, which the agency calls a big success.
- The FCA regulator in the UK, which is a dominant fintech hub, has said it sees an "aspiration for global standards" in terms of regulations.
Hong Kong is taking steps to provide a friendlier environment for cryptocurrencies, with a proposal for a regulatory "sandbox" - a space for startups to experiment and innovate without costly, sometimes crippling, regulation.
The move resembles two-year-old UK program that Britain's regulators have hailed as a success, and is perhaps plays a part in the UK's dominance as a global fintech hub. At the time of the UK sandbox debut, the country's Financial Conduct Authority said the purpose was to provide firms with:
- The ability to test products and services in a controlled environment;
- Reduced time-to-market at potentially lower cost;
- Support in identifying appropriate consumer protection safeguards to build into new products and services;
- Better access to finance;
Hong Kong can look to the UK for inspiration. This year, the FCA took its sandbox idea a step further, starting a sandbox especially for the fintech industry after the success of the 2016 program.
FCA board member and Director of Strategy and Competition Christopher Woolard said in March that the agency has worked with some 500 firms, of which 70 has been in depth via the fintech sandbox, according to Trustnodes.
He said he saw an "aspiration for global standards" in terms of regulations. Some 90% of the companies that participated in the first round of applications for the UK sandbox, including Blockchain companies and startups, have "gone on to market," while many firms also find it easier to get access to funding, Woolard said.
In February of this year, the FCA granted a London-based blockchain startup a Small Electronic Money Institution (EMI) registration, allowing it to create a blockchain-based currency within the existing regulatory framework, Cointelegraph reported.Innovate Finance, said it is important to dispel the myth of regulation being a hurdle for young firms to overcome, according to Crowdfund Insider.
She said earlier this year: "Regulators can, on the contrary, play an active and positive role in encouraging innovation by giving unique business models 'permission to play' in the highly competitive financial services sector."