In a recent speech at the Greenwich Economic Forum in Hong Kong, Julia Leung, the chief executive of the Hong Kong Securities and Futures Commission (SFC), emphasized Bitcoin's resilience as an alternative asset.

Leung acknowledged the common view among central bankers and economists that virtual assets like Bitcoin and Ether lack 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 has survived multiple cycles of boom and bust, clearly showing its staying power as an alternative asset," she stated. Leung also highlighted the enduring significance of Bitcoin's underlying technology, distributed ledger technology (DLT), affirming that "DLT is here to stay."

Her comments came as the SFC's new licensing regime for crypto trading platforms took effect, requiring all platforms serving retail investors in Hong Kong to obtain a license. This regulatory move has sparked criticism from some quarters. Duncan Chiu, a Hong Kong lawmaker, expressed concerns over the "excessively stringent" regulations, arguing that they have deterred major global exchanges from entering Hong Kong and have weakened market confidence.

Leung, however, clarified that the regulator's support for the Web3 ecosystem in Hong Kong "should not be taken as an endorsement of the VA asset class." She underscored the speculative nature and extreme price volatility of virtual assets, stressing that the SFC has implemented comprehensive safeguards to protect investors while meeting their demands.

The SFC is also preparing to regulate stablecoins. "Preparations for a new regime to regulate fiat-referenced stablecoins are underway," Leung revealed. The Hong Kong Monetary Authority (HKMA) recently completed a consultation on this proposed regime, which includes requiring stablecoin issuers to ensure full backing by high-quality and highly-liquid reserve assets.

Furthermore, the SFC is actively involved in Project Ensemble, an initiative by the HKMA launched in March to explore the potential of a central bank digital currency (CBDC). "This new project on wholesale central bank digital currency will initially focus on tokenized deposits," Leung said. A sandbox will be launched to pilot tokenization use cases, including the trading and settlement of tokenized products such as green bonds and carbon credits.

Leung's remarks underscore the complex landscape of cryptocurrency regulation in Hong Kong, balancing innovation and investor protection as the city navigates the evolving digital asset space.