(Yicai Global) Nov. 14 -- Development of the crypto assets industry will proceed in a prudent and stable manner in Hong Kong, Financial Secretary Paul Chan said in a blog published online yesterday.

The special administrative region plans to make full use of innovative technologies, while taking precautions to avoid fluctuations and passing risks to the real economy, Chan added. 

The administration showed its attitude to the virtual economy in a policy statement released at the end of last month, he noted, saying that such financial innovations must be accompanied by regulations to control risks. 

The Hong Kong government has proposed several pilot plans for development of virtual assets, Chan said, including the release of the world's first tokenized government green bonds. 

The Hong Kong Monetary Authority, the SAR's central bank, is studying using digital Hong Kong dollars to link legal tender and virtual assets and has begun discussions on how to standardize regulation. 

The Securities and Futures Commission is also keeping tabs on virtual assets. The SFC has thus far issued licenses to two virtual assets exchanges, with similar regulations to those for conventional bourses, Chan said, and the government would welcome the possibility of bringing funds traded on virtual assets exchanges into the SAR. 

There has been a meltdown of crypto currencies since mid-2022 and bankruptcies of related firms in overseas markets. Leading cryptocurrency exchange FTX filed for bankruptcy on Nov. 11.

FTX founder Sam Bankman-Fried said that same day that more than 130 FTX entities, including crypto exchange FTX, unit FTX US, and affiliate Alameda Research, had voluntarily filed for Chapter 11 bankruptcy through which a company may continue to operate, though creditors and the court must agree a debt repayment plan.

These cases have highlighted the need for transparent operations and proper supervision to ensure the industry's steady and sustained development, Chan said. 

Editor: Tom Litting