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

The Hong Kong Treasury Department does not consider crypto to be a ‘target asset’ for the nation’s Exchange Fund, even though it does invest a small portion of funds into crypto assets.

According to local media outlet On CC, Hong Kong Councilor Johnny Ng suggested that the government should consider adding cryptocurrencies into its fiscal reserves. Ng said that the government could use the Hong Kong Exchange Fund to hold and buy 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.

However, Chan does confirm at the Legislative Council meeting that the Hong Kong Exchange Fund does hold a small amount of crypto assets through external investment managers. Though, he said the proportion is “very small.”

The Hong Kong Monetary Authority external investment managers often diversify the fund’s asset classes and markets with assets and stocks from around the world, depending on the asset performance evaluated by external investment managers at different times.

Chan pointed out that authorities issued the “Policy Declaration on the Development of Virtual Assets in Hong Kong” in October 2022, indicating that the government and regulatory agencies adhere to the same principle of “same business, same risks, same rules” when it comes to virtual assets.

In addition, authorities have introduced a licensing system for virtual asset service providers through amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance Bill to ensure that crypto trading platforms comply with international standards.

As previously reported by crypto.news, the Hong Kong government is looking for ways to speed up the making of crypto regulations in order to keep up with the rapidly evolving global crypto industry.

Chan did not elaborate on how the Hong Kong government plans to fast-track its crypto regulations. However, he does acknowledge that the virtual assets sector provides many financial innovation opportunities as well as “complexities to the financial system.”