The rules come into effect from Thursday and let crypto exchanges provide trading services to individuals and institutions if they secure and comply with licences designed to safeguard investors

Hong Kong implemented a new crypto regulatory regime in an effort to encourage a digital-asset hub, a move that has stirred interest but has yet to secure significant investment pledges from an industry subdued by a market crash in 2022.

The rules come into effect from Thursday and let crypto exchanges provide trading services to individuals and institutions if they secure and comply with licences designed to safeguard investors from the risky practices revealed in last year’s crash.

The framework, months in the making, is coming into effect just as crypto companies scour the world for appropriate bases amid a clampdown in the US. Jurisdictions such as Hong Kong and Dubai are looking to attract firms, while Singapore plans restrictions on retail-investor participation. The EU in April approved the most extensive digital-asset regulations of any developed economy.

Hong Kong’s Securities & Futures Commission (SFC) has received numerous queries from concerned parties, while companies like Huobi, OKX and Amber Group have stated they plan to apply for licences under the framework.

Hong Kong made the shift in policy in 2022 as part of an attempt to re-establish its image as a leading financial centre. The city offers a local market as well as a conduit to Chinese wealth, especially if Beijing ever loosens a 20-month-old prohibition on crypto trading on the mainland.

Yet 15 leading digital-asset businesses – including exchanges, crypto lenders and stablecoin issuers – withheld from elaborating on particular investment plans for Hong Kong when queried about them by Bloomberg News. The exchanges included names such as Binance, Coinbase, Bybit and Huobi and taken together accounted for the huge bulk of crypto trading volumes.

Potential investors are moving ahead conservatively in setting up virtual-asset trading platforms in Hong Kong, stated Vince Turcotte, director of digital assets at regulatory technology firm Eventus, which is working with some firms seeking licences. They want to be certain that they do not end up burning cash.