Virtual Assets Report

FINDINGS AND OBSERVATIONS 21 20 When considering investing in virtual assets, people are more concerned about fraud and virtual assets’ not being regulated than about the inherent risks associated with virtual assets. As shown in Figure 17, the respondents selected “Fraud by the investment platform” (51.9% in Phase 1 and 56.6% in Phase 2) and “Virtual assets are not regulated” (55.1% in Phase 1 and 56.1% in Phase 2) most often as one of their top three concerns. The respondents also displayed more concerns about fraud in Phase 2, in which the selection of “Fraud by the investment platform” and “Fraud by the virtual asset issuer” increased by 4.7 and 3.4 percentage points, respectively. About 40% of the Phase 1 respondents and 35% of the Phase 2 respondents selected “High volatility of virtual asset values” as one of their top three concerns. Overall, only about 3% of the respondents indicated not having any concerns. Figure 17. Greatest Concerns When Considering Investing in Virtual Assets: Phase 1 vs. Phase 2 Phase 1 Phase 2 Difference (in percentage points) Disagree / Strongly Disagree Neutral Agree / Strongly Agree Disagree / Strongly Disagree Neutral Agree / Strongly Agree Disagree / Strongly Disagree Neutral Agree / Strongly Agree 1 Virtual assets traded on HK- licensed exchanges are less risky, i.e., have less volatile prices, than those traded on non-HK-licensed exchanges. 20.9% 50.0% 29.1% 24.2% 45.7% 30.1% +3.3 -4.3 +1.0 2 Virtual assets traded on HK- licensed exchanges are less likely to have frauds than those traded on non-HK-licensed exchanges. 14.5% 43.7% 41.9% 17.5% 40.1% 42.4% +3.1 -3.6 +0.5 To understand the Hong Kong population’s perception of Hong Kong-licensed exchanges, the respondents were given a list of 10 statements on the superiority of HK-licensed exchanges over the non-HK-licensed ones, and were asked to indicate their level of agreement with each. Table 2 summarises the results. 10% 0% 20% 30% 40% 50% 60% 70% No Yes Phase 1 Phase 2 Figure 18. Respondents Aware of Licensing Requirement for VASPs to Operate in Hong Kong Table 2. Respondents’ Agreement with Statements about HK-Licensed Exchanges IV. VIEWS ON VIRTUAL ASSET REGULATIONS According to the Phase 1 results, only 42.1% of the respondents were aware of the licensing requirement for virtual asset service providers (VASPs), including crypto exchanges, to operate in Hong Kong that was to go into effect in June 2023. In Phase 2, the proportion of respondents who were aware of this licensing requirement increased by 13.1 percentage points, to 55.2% (see Figure 18). 10% 20% 30% 40% 50% 60% 0% Most Important 2nd Most Important 3rd Most Important Fraud by the investment platform Phase 1 Phase 2 Virtual assets have no actual assets or cash flow backing Phase 1 Phase 2 I do not have any concerns Phase 1 Phase 2 Fraud by the virtual asset issuer Phase 1 Phase 2 Do not know how to value virtual assets Phase 1 Phase 2 Virtual assets are not regulated Phase 1 Phase 2 Virtual assets are too complicated to understand Phase 1 Phase 2 Others Phase 1 Phase 2 High volatility of virtual asset values Phase 1 Phase 2 Environmental impact of virtual assets (e.g., energy consumption of mining) Phase 1 Phase 2