Amidst the $213 million scandal involving the cryptocurrency exchange JPEX, the Hong Kong government has maintained its commitment to advancing its Web3 vision for the region.

Christopher Hui, the Secretary for Financial Services and the Treasury of Hong Kong, assured the city’s vision to develop the web3 market during a keynote address at Hong Kong Fintech Week on November 2.

JPEX Scandal Would Not Deter Hong Kong’s Vision

Hui emphasized that the recent controversy surrounding JPEX would not deter the government’s determination to foster growth in the Web3 market.

The JPEX scandal revolves around a financial scandal involving the Dubai-based exchange, which has faced allegations of defrauding 2,500 locals. The scandal has balloned up to $213 million since it was uncovered in late September.

This prompted the Securities and Futures Commission (SFC) to issue a warning that JPEX was promoting its services locally without a license.

In response to the alleged actions of the JPEX scandal, Hong Kong has vowed to tighten its cryptocurrency regulations.

The SFC has established a task force in collaboration with the police to combat illicit activities associated with cryptocurrency exchanges. Additionally, the regulatory body has updated its policies concerning crypto sales and requirements.

Hui stated that significant regulatory developments are on the horizon. As part of the government’s Web3 regulatory framework plan, the SFC will provide guidance on tokenized securities and the tokenization of SFC-authorized investment products.

Crypto regulations will be expanded to encompass buying and selling activities that go beyond trades conducted on regulated trading platforms.

Hong Kong to Update Stablecoin Regulations

A joint consultation on stablecoins is forthcoming, jointly organized by the Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau. This consultation will gather feedback from a January HKMA discussion paper.

Hui also revealed that the HKMA had encouraged banks to offer services to crypto companies within the region earlier this year. Going forward, the HKMA plans to consult with the sector on guidance for banks providing digital asset custodial services.

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