This photo taken on May 27, 2023 shows customers in a cryptocurrency exchange office in Hong Kong. (PHOTO / AFP)

The Hong Kong Special Administrative Region cements its status as a global digital asset hub, with “forward-looking” and transparent cryptocurrency regulations coupled with its standing as Asia’s largest offshore wealth management center, according to one of the world’s foremost financial experts.

Matt Long, APAC general manager of FalconX, the world’s largest institutional digital assets prime brokerage, made the remarks at a media roundtable on Thursday in Hong Kong.

In November, Hong Kong’s Securities and Futures Commission also issued two circulars to address the risks and regulatory requirements in tokenization-related activities 

Long said he expected the HKSAR government to continue to enhance definition and clarity of cryptocurrency regulations this year, which will provide businesses certainty and generate capital for digital asset investors.

READ MORE: Opportunity seen for HK to become digital asset hub

FalconX expanded its Asia-Pacific market presence with the launch of operations in Hong Kong on Thursday, following the opening of its Singapore office in 2022.

The US-based financial services firm will deliver over-the-counter brokerage and over-the-counter (OTC) virtual asset derivatives services to professional investors in Hong Kong, including proprietary trading firms, family offices, and fund managers.

Hong Kong is ramping up efforts to create a stable and secure environment for the burgeoning cryptocurrency sector. The latest moves include the announcement of planning licensing bills for stablecoin issuers and virtual asset OTC services. 

The statement follows the launch of a public consultation aimed at regulating stablecoin issuers in December by the Hong Kong Monetary Authority and the Financial Services and the Treasury Bureau. The consultation period is expected to conclude on Feb 29.

In November, Hong Kong’s Securities and Futures Commission also issued two circulars to address the risks and regulatory requirements in tokenization-related activities.

“These progressive regulations provide clarity that allows investors and brokers to operate their businesses effectively,” Long said.

Hong Kong’s asset and wealth management sector saw its business amount to over HK$30.5 trillion($3.9 trillion)  

Long also highlighted the escalating interest from Hong Kong family offices in the digital asset sphere.

READ MORE: Investor education key to make HK trusted virtual asset hub

Speaking from two decades of experience in Asia, Long said there is a distinct cultural inclination toward risk-taking among investors, which feeds into their interest in asset classes that can introduce greater risk — and potentially greater returns — into their portfolios.

Long noted that as wealth transitions from older to younger members within families, there is a noticeable shift toward digital-savvies, often in their 30s. “These younger, digital-native managers are seeking to incorporate virtual assets into their family portfolios,” he said, adding that it is a sustained trend of integrating virtual assets into affluent Asian families’ financial strategies.

As of the end of 2022, Hong Kong’s asset and wealth management sector saw its business amount to over HK$30.5 trillion($3.9 trillion), with 64 percent of the funding sourced from non-Hong Kong investors. The Hong Kong government plans to attract at least 200 family offices by 2025. 

Contact the writer at tianyuanzhang@chinadailyhk.com