- The Hong Kong Securities and Futures Commission (SFC) is developing regulations for cryptocurrency exchanges.
- RTHK reported that the SFC is monitoring the crypto space closely and will start public consultations soon.
- Following FTX’s collapse, the Financial Secretary of Hong Kong, Paul Chan, says the region will welcome the crypto sector.
- A regional legislative body amended the licensing regime for cryptocurrency firms early this month.
In reaction to the sudden demise of FTX, the Hong Kong Securities and Futures Commission (SFC) is working on regulatory stipulations for local cryptocurrency exchanges. In a publication today, Hong Kong public broadcaster RTHK revealed the SFC is working to avoid a similar situation to the FTX crisis within its jurisdiction.
RTHK reported that the SFC is keeping close tabs on the crypto sector and will begin public consultation as soon as possible. As revealed, the SFC admitted to establishing a regulatory framework to protect investors and the industry.
Hong Kong’s Willingness to Embrace Cryptocurrency Despite FTX Crisis
The FTX collapse didn’t discourage authorities from attempting to embrace the industry. Recall that in November, just a few days after the collapse of FTX, the Financial Secretary of Hong Kong, Paul Chan said that the region is willing to welcome the crypto sector and will value its innovative attributes.
The comment of the Financial Secretary has been followed up by notable developments. Early this month, the region’s legislative organ made amendments to cryptocurrency firms’ licensing regime.
Highlights of the Amended Regulatory Stipulation
The amendment to the Virtual Assets Service Providers licensing regime is aimed at monitoring cryptocurrency exchanges’ activities and that cryptocurrency firms must obtain a license before commencing operations in the region. However, this stipulation is subject to a future review by the Hong Kong Administration as the cryptocurrency sector grows.
Furthermore, it focuses on preventing cryptocurrency usage for money laundering and financing terrorism and aims to effectively protect retail investors and their assets on a cryptocurrency exchange.
SFC reports that Hong Kong has embraced a comprehensive supervision approach concerning digital asset service providers, while other jurisdictions prefer softer standards. This can include separating client assets and regularly submitting audited financial reports and accounts.
On the Flipside
- One aspect of the amendments worth noting is the similarities between the regulation of virtual asset providers and traditional financial institutions, even though they target virtual assets.
Why You Should Care
Despite challenging market conditions, Hong Kong welcomes investments in digital assets and wants to secure customer funds through robust regulations.