After the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, the largest cryptocurrency exchange in the U.S., for allegedly violating securities laws, Johnny Ng, a Hong Kong legislative council member, invited Coinbase and other exchanges to apply for crypto trading platform licenses in Hong Kong.
"I hereby offer an invitation to welcome all global virtual asset trading operators including @coinbase to come to HK for application of official trading platforms and further development plans," Ng said on Twitter. "Please feel free to approach me and I am happy to provide any assistance."
On June 6, the SEC filed a lawsuit against Coinbase, alleging that the company failed to register with the SEC, according to a news release. Tom Duff-Gordon, Coinbase's vice president of international policy, said that while the company is "really excited to be expanding overseas," they are not giving up on their U.S. operations.
“The easiest thing for us to do would be to cut and run but that's not what we're doing,” Duff-Gordon said in an interview. “We want to represent the industry to stand up and to fight for regulatory clarity in the U.S.," CoinDesk reported.
Ambre Soubiran, the CEO of Paris-based Kaiko, a crypto market data provider, predicted in April that the U.S.'s regulation-by-enforcement approach is going to push the crypto industry to Hong Kong, which has been moving forward with a plan to become a global hub for crypto innovation, CoinTelegraph reported.
“The U.S. being more stringent these days than ever on crypto and Hong Kong regulating in a more favorable way…is going to clearly shift the center of gravity of crypto assets trading and investments more towards Hong Kong,” Soubiran said.
During a June 13 House Financial Services Committee hearing on "Providing Clarity for the Digital Asset Ecosystem," Coy Garrison, a partner at Steptoe and Johnson LLP and a former counsel to SEC Commissioner Hester Peirce, warned that the U.S.' current regulatory environment puts the country at a "competitive disadvantage" compared to other countries.
In his testimony, Garrison said, "The European Union, Canada, Dubai and Hong Kong are examples of jurisdictions that in recent months have implemented new legislation or regulations for digital assets, which create attractive destinations for entities that are made to feel increasingly unwelcome by regulators here in the U.S." He added, "This is not empty rhetoric: I have traveled to two of these jurisdictions in the past six months to explore business opportunities under these new foreign regulatory regimes, and I have regular conversations with industry participants in the U.S. actively considering moving to new jurisdictions."