Hong Kong Treasury says crypto is not a ‘target asset’ for its Exchange Fund

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As a seasoned researcher with a knack for deciphering financial policies, I find it intriguing to observe the dynamic between traditional finance and emerging digital assets like cryptocurrencies, particularly in a global financial hub like Hong Kong.

The Hong Kong Treasury Department views cryptocurrencies as non-priority investments for their Exchange Fund, although they do allocate a limited amount of their funds towards crypto assets.

As reported by local news source On CC, Hong Kong Councilor Johnny Ng proposed that the government might want to think about incorporating cryptocurrencies within its financial reserves. Ng stated that it would be feasible for the government to utilize the Hong Kong Exchange Fund to purchase and store crypto assets.

Secretary for Financial Services and the Treasury, Joseph Chan responded to Ng’s request with a written letter, explaining that crypto assets are not the “target asset” for Hong Kong Exchange Fund investments.

Indeed, it’s been confirmed by Chan at the Legislative Council meeting that a minimal portion of the Hong Kong Exchange Fund’s investments are in cryptocurrencies. He emphasized, though, that this percentage is quite modest.

Investment managers overseen by the Hong Kong Monetary Authority frequently adjust the fund’s investment mix by incorporating global assets and equities, based on the performance assessment of these assets made by external investment managers at various points in time. This diversification strategy allows for a more flexible allocation across various market sectors worldwide.

Chan highlighted that in October 2022, authorities published the “Policy Declaration on the Regulation of Cryptocurrencies in Hong Kong.” This suggests that the government and regulatory bodies will apply consistent principles – “identical business, identical risks, identical rules” – when dealing with digital assets.

Furthermore, authorities have established a licensing framework for crypto trading platforms (known as virtual asset service providers) by modifying the Anti-Money Laundering and Counter-Terrorist Financing Ordinance Bill. This change aims to make sure these platforms adhere to international standards in their operations.

According to crypto.news’ previous report, the Hong Kong administration is seeking methods to expedite the creation of cryptocurrency regulations so as to align with the fast-paced advancements occurring within the international crypto market.

Chan didn’t go into detail about the Hong Kong government’s strategy for expediting crypto rules. Nevertheless, he conceded that the digital asset industry offers numerous possibilities for financial advancement, but also presents “challenges to the financial system.

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2024-12-11 16:34