Julia Leung, the chief executive of the Hong Kong Securities and Futures Commission, said that bitcoin has clearly shown its staying power as an alternative asset.

In a Wednesday speech delivered at the Greenwich Economic Forum Hong Kong, Leung said that most central bankers and economists would say that virtual assets like bitcoin and ether do not have any intrinsic value.

“I do not disagree with this view. While the intrinsic value debate will continue, it is a fact that, 15 years on, Bitcoin BTC +0.16% has survived multiple cycles of boom and bust, clearly showing its staying power as an alternative asset,” Leung said. “More clearly, its underlying technology — DLT — is here to stay.”

Leung’s comment on bitcoin came as the SFC’s licensing regime officially kicked off its recent requirement for all crypto trading platforms to obtain a license to serve retail investors in Hong Kong. 

Duncan Chiu, a Hong Kong lawmaker, has raised concerns over the “excessively stringent” regulations for crypto exchanges to obtain a license, criticizing that these rules have pushed major global exchanges away from entering Hong Kong and have dampened market confidence.

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Leung said in her speech that the regulator’s support for the Web3 ecosystem in Hong Kong “should not be taken as an endorsement of the VA asset class.”

“As things currently stand, VAs are highly speculative in nature with extreme price volatility,” Leung added. “Therefore, while meeting investors’ demand, we have made sure that wide-ranging safeguards are in place to protect investors.”

Regulations in the making

The SFC is also working towards regulating stablecoins. “Preparations for a new regime to regulate fiat-referenced stablecoins are underway,” Leung said. “Recently, the Hong Kong Monetary Authority has completed a consultation on the proposed regime, including requiring stablecoin issuers to ensure full backing by high-quality and highly-liquid reserve assets.”

The SFC has also been engaging in Project Ensemble, a tokenization project launched by the HKMA in March to develop its potential central bank digital currency. 

“This new project on wholesale central bank digital currency will initially focus on tokenized deposits,” Leung also said. “A sandbox will be launched to pilot tokenisation use cases, including trading and settlement of tokenised products, such as green bonds and carbon credits.”