Balancing Regulation and Growth: Bitrace CEO’s Insights on Hong Kong’s Crypto Market
Recently, Bitrace CEO Isabel SHI was invited to the “FORESIGHT 2024” summit, where she shared her profound insights and future outlook on Hong Kong’s cryptocurrency market under the theme “The Increment of Hong Kong’s Crypto Market.”
Rapid Development and Growth Potential of Hong Kong’s Crypto Market
During her presentation, Isabel pointed out that Hong Kong’s cryptocurrency market has experienced rapid growth in recent years. She mentioned that Bitrace, as one of the first Regtech companies to enter the Hong Kong market, has maintained close communication and cooperation with regulatory and law enforcement agencies. Through in-depth research and on-chain data analysis, Bitrace observed a strong growth trend in the overall market following the implementation of Web3 policies in Hong Kong, particularly in VATP exchanges and the VAOTC market.
For example, the OTC market has seen transaction volumes reach hundreds of billions of dollars over the past three years, with more than 50% of that volume occurring in the past year. Additionally, the Hong Kong market is showing clear signs of institutionalization, with most OTC transactions exceeding $100,000 per trade.
Isabel also noted that with the upcoming legislation on VAOTC, the market is poised for healthier and more orderly growth. As a Regtech company, Bitrace aims to leverage its data capabilities to help regulators better understand and supervise the industry, driving the sector toward compliance and sustainable development.
Balancing Regulation and Industry Growth
In response to the risks and criminal activities associated with the expanding cryptocurrency market, Isabel emphasized that regulators, Web3 companies, and users must take risk mitigation seriously. She revealed that Bitrace’s recent in-depth research on the Hong Kong market showed that the proportion of funds associated with high-risk activities has decreased from 21% in previous years to 12%, indicating that the Hong Kong government’s “New Web3 Policies” have positively impacted the local industry’s development. However, this percentage is still higher than in the more mature U.S. market.
Isabel stressed that cryptocurrency risks encompass various categories, including fraud, illicit trade, sanctions, and hacking. On-chain addresses exhibit different risk levels depending on the proportion and amount of related funds they receive. Therefore, regulatory bodies should establish clear anti-money laundering standards, closely monitor and intercept high-risk funds, and keep a watchful eye on general risks by regularly reviewing relevant transactions or companies.
Isabel believes that without Regtech, the Web3 industry will struggle to develop. For an emerging industry, it’s essential to find a balance during its growth. If regulation is too strict, the industry will struggle to grow; if it’s too loose, the inherent characteristics of cryptocurrencies and the space for new industries could easily turn it into a lawless zone. Establishing regulatory policies aligned with the industry’s development level can create a healthier environment for crypto enterprises, laying a solid foundation for the long-term growth of Hong Kong’s crypto market.
Additionally, Isabel advised businesses and users to prioritize KYT (Know Your Transaction) and KYA (Know Your Address) in their transactions, ensuring a thorough understanding of counterparties and sources of funds to better mitigate risks.
Fostering Trust and Healthy Industry Development
Finally, Isabel expressed Bitrace’s commitment to enhancing regulatory confidence in the crypto market’s development through its monitoring capabilities, fostering mutual trust between regulators and enterprises. This trust will provide a foundation for the healthy development of Hong Kong’s crypto market, enabling it to maintain its leading position in global competition.
Through this presentation, Isabel Shi offered an in-depth analysis of the current state of Hong Kong’s cryptocurrency market, its future growth potential, and risk mitigation strategies, further demonstrating Bitrace’s determination and efforts in promoting the industry’s healthy development.
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