Hong Kong Official: Bitcoin Legislation Not Necessary

A senior Hong Kong official has indicated that the government does not see a need for legislation that would regulate or ban bitcoin activities.

The statement by Secretary for Financial Services and the Treasury Professor KC Chan comes in response to a question submitted during a meeting of the Legislative Council of Hong Kong by council member Leung Yiu-chung.

Leung requested an update on the investigation into the MyCoin bitcoin investment scam as well as clarity on whether officials intend to regulate bitcoin activities more actively, according to a press release from the Hong Kong government.

In response, Chan described bitcoin as limited in scope, noting that it does not pose a substantial threat to Hong Kong's financial system given its current lack of widespread adoption in the region.

Chan said:

"The Government does not consider it necessary to introduce at the moment new legislation to regulate trading in such virtual commodities or prohibit people from participating in such activities."

Chan added that, should the need arise, Hong Kong regulators can draw from existing legal statutes, both domestic and international, to deal with instances of fraud or criminal activities that involve digital currencies.

“The police will take enforcement action if they find information which involves criminal conduct,” he said.

Watchful stance outlined

In his response, Chan suggested that his office and others will continue to watch developments in the bitcoin space.

Further, he outlined how financial institutions in Hong Kong are subject to strict reporting requirements "when establishing or maintaining business relationships with customers or clients who are operators of any schemes or businesses relating to virtual commodities".

Chang added:

“The Government and financial regulators will keep a close watch on the development of bitcoins and other virtual commodities, and maintain contacts with their counterparts in other places through active participation in meetings of the relevant international organizations (such as the Financial Action Task Force.”

Reiterating past warnings issued by the Hong Kong government, Chang stated that “the highly speculative nature” of bitcoin presents a potential risk to investors.

More Mycoin details

Local law enforcement officials continue to investigate the collapse of MyCoin, which resulted in millions of dollars in losses for investors in the scheme, according to Chang.

Police have since arrested several individuals in connection with the fraudulent enterprise.

"The Commercial Crime Bureau of the Police is investigating the case, and has searched various locations and seized a number of computers, tablets, mobile phones, account records, etc.," he said.

Chang added that those arrested during the investigation have been released on bail.

Legislative council building image via Shutterstock