In response to the recent crash in the cryptocurrency market, Hong Kong’s deputy financial secretary has published a blog suggesting that a regulatory regime would effectively prevent the scenario of crypto exchanges crashing amid the so-called “crypto winter.” “.

Emphasizing transparency, the blog mentioned the use of regulations and how they can help monitor the development of the virtual asset industry in Hong Kong. The article says: “While innovation is actively embraced, there must be a regulatory package that adapts and keeps up with the times to properly manage risks and create prerequisites for orderly and vigorous development of the market.”

Although the Office of the Financial Secretary in the blog did not mention the recent collapse of the FTX exchange, it only seemed to be highlighting valuable points and advice. Expressing how important it is to maintain security and adequately manage risks, the Financial Secretariat noted:

“We must not only make the most of the potential that innovative technologies bring, but also take care to guard against fluctuations and the potential risks they can cause, and prevent these risks and impacts from being passed on to the real economy.”

In addition, the administration advised virtual asset companies to maintain separate accounts to distinguish client assets. They also recommended that cryptocurrency companies reserve actual operating expenses for at least 12 months, among other requirements.

In concluding, the Ministry of Finance reflected on the economy, saying: “In considering the whole direction of development, one of the central points is that if finance serves the real economy, technological innovation must also play a role in serving the real economy”.

Notably, this update comes shortly after Hong Kong released its latest policy statement related to the prospects for virtual asset development, including issuing tokenized green bonds and preparing to develop the digital Hong Kong dollar.

Before that, Hong Kong made some critical moves that defined its goal of becoming an international hub for virtual assets. The city’s main financial regulator, the Securities and Finance Commission (SFC), has reportedly been configured to allow re-registration of Bitcoin (BTC) and Ethereum (ETH) on exchanges that allow retail traders.

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