The significance of Bitcoin trading moving from virtual to physical is substantial. Previously, the closure of Mt. Gox was due to technical vulnerabilities, which have also become a pain point for Bitcoin players.
According to reports, the world's largest Bitcoin exchange operator, Mt. Gox, announced on February 28 that it had applied for bankruptcy protection in the Tokyo District Court of Japan after 850,000 Bitcoins were stolen from its trading platform. Mt. Gox CEO Mark Karpeles bowed in apology at a press conference held in Tokyo that day, stating, "The loss of Bitcoin was due to vulnerabilities in the company's system."
For Bitcoin buyers, purchasing Bitcoin first requires depositing money into an online trading platform and then conducting online transactions, a model that is vulnerable to hacker attacks. However, with the opening of physical stores, Bitcoin players can walk into a physical store, purchase Bitcoin directly with cash, and then store the virtual currency in their electronic wallets, completing the entire transaction process within minutes. According to Hong Kong Customs' anti-money laundering regulations, customers trading Bitcoin in-store will be required to provide identification and proof of address.
However, the Hong Kong Special Administrative Region government has begun to closely monitor the use of Bitcoin in Hong Kong. The Hong Kong Monetary Authority has classified Bitcoin as a high-risk virtual electronic commodity rather than a currency, thus excluding it from its regulatory scope. Therefore, operating Bitcoin-related businesses does not require a government license, similar to selling online game point cards.
In January, the Secretary for Financial Services and the Treasury, Chan Ka-keung, stated that the development of Bitcoin or other virtual currencies in Hong Kong has not yet become a widely used payment medium or electronic currency. Regulatory authorities have been closely monitoring the development of such virtual currencies and maintaining contact with regulatory authorities worldwide, including those in mainland China, to ensure that the use of Bitcoin does not adversely affect Hong Kong's financial stability.
Chan Ka-keung urged citizens to exercise caution, as Bitcoin is a highly speculative commodity. When considering trading or investing in Bitcoin, citizens must take into account the price volatility of Bitcoin, as well as the lack of physical backing, issuers, or support from the real economy, to enhance risk awareness.
