E-NEWS: HONG KONG INVESTORS RUSH TO ENTER THE BITCOIN MARKETS
E-NEWS: HONG KONG INVESTORS RUSH TO ENTER THE
BITCOIN MARKETS
With bitcoin again dominating headlines, a
flood of new money has recently entered the cryptocurrency markets – including
from emerging crypto markets such as Hong Kong. Local media outlets are
reporting, however, that many new investors may be ill-prepared for the risks
associated with cryptocurrency.
Bob Laberge, a
Canadian in His 50s Living in Hong Kong, Recently Invested in Bitcoin for the
First Time.
Speaking to South China Morning Post, Mr. Laberge
stated that he first invested on November 15th, purchasing $500 USD worth of
bitcoin when the price was at approximately $6,600 – despite knowing very
little about cryptocurrency at the time. After a fortnight, Mr. Laberge chose
to invest “tens of thousands more” into bitcoin, however, and was left in a
high state of anxiety due to his chosen bitcoin exchange failing to credit his
account for four days.
“The way I
dealt with the banks was exactly the mindset when I was getting into bitcoin.
For most exchanges it’s very difficult to get in touch with them. The only way
to contact people, unlike a bank where you call their number and someone
answers in a couple of minutes, is through a support ticket. And if they don’t
answer the support ticket you are left hanging and it’s stressful when you’ve
got a huge amount of money sitting there.”
Mr. Laberge
stated that he will not invest any further capital into bitcoin, despite his
investment increasing in value by 70%. “My wife saw that it was going up and
she said we should invest more but I said ‘No, let’s not lose our heads.”
The President
of the Hong Kong Bitcoin Association, Leo Weese, Has Commented on the Rush of
New Investors Entering the Crypto Markets
“There is
certainly a big influx of new [bitcoin] users; the price increases give people
an incentive to get in as fast as they can,” Mr. Weese stated. “The problem is
that people are not making good decisions and they’re not thinking about
exactly what it is that they’re investing in and what the risks are.”
Mr. Weese
stated that he expects to see the collapse of several “poorly run” Asian
cryptocurrency exchanges in future, warning that many investors are
inadequately accounting for counterparty risk. “People confuse bitcoin always
being around with bitcoin exchanges always being around, but that’s not the
case.”
Rapid Growth Poses Challenges to Regulators
Charles Mok,
a representative of the IT sector to Hong Kong’s legislative council, has
described the booming cryptocurrency sector as posing a number of challenges to
regulators. “It puts us in a very uncomfortable situation,” Mr. Mok stated. “On
the one hand we want to see an industry developing around cryptocurrency. But
on the other hand, I don’t think these kinds of speculative activities … are
really conducive to the long-term development of crypto-technology and
cryptocurrencies.”
Mr. Mok
expressed concerns that should local bitcoin exchanges collapse, that Hong
Kong’s Securities and Futures Commission (SFC) would seek to regulate the
cryptocurrency industry. He states that the SFC would likely lack the
experience and knowledge required to develop an effective regulatory apparatus
for crypto, and could potentially resort to enacting prohibitive policies.
Despite Mr. Mok’s concerns, Hong Kong’s financial regulator has not expressed the
intention to develop a specialized legislative framework for cryptocurrencies.
On December
11th, the SFC published a document articulating that companies
seeking to offer “bitcoin futures contracts and cryptocurrency-related
investment products” in Hong Kong are required to adhere to existing
regulations defined in the territory’s “Securities and Futures Ordinance.”
