A senior official in Hong Kong has confirmed that the government will not introduce legislation that would regulate or ban bitcoin activities.
The decision by Secretary for Financial Services and the Treasury, Professor KC Chan, comes as a boost to bitcoin merchants, who had feared legislation in the wake of the MyCoin bitcoin investment scam.
Chan’s statement was in response to a question submitted during a meeting of the Legislative Council of Hong Kong, by Leung Yiu-chung, which asked for an update on the MyCoin investigation as well as clarity on whether officials intended to regulate bitcoin activities.
No need for legislation
In his statement Chan said that bitcoin was limited in scope and its lack of widespread adoption meant that it does not pose a significant threat to Hong Kong’s financial system.
He said, “Bitcoins have not yet been accepted widely as a medium of payment in Hong Kong as compared with other places, and their circulation as a medium of exchange in daily life or business transactions is insignificantly limited. There are only a very small number of vendors claiming that they would accept bitcoins as a medium of payment”.
He also pointed out that if the need should arise, Hong Kong authorities can use the existing legal structure, both domestically and internationally, to deal with instances of fraud and criminal activity that involve digital currencies.
Government to watch bitcoin developments
However, Chan also noted in his statement that government offices will continue to watch developments in the bitcoin space, and hasn’t ruled out legislation in the future.
He 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.”
MyCoin investment scam
The decision came as a surprise to some members of the community, in light of the recent MyCoin investment scam in which it is estimated that up to 3,000 investors lost a combined total of HK$3 billion. Police have so far received over 100 complaints related to the case, with the total amount of money lost currently standing at HK$180 million.
Chan confirmed that the investigation was ongoing and that the police had made several arrests in connection with the case.