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Cryptocurrency regulation in Hong Kong is undergoing changes. The Securities and Futures Commission (SFC) is reportedly introducing a new licensing system to regulate all cryptocurrency exchanges operating in Hong Kong.
Hong Kong’s new Crypto regulation
SFC CEO Ashley Alder spoke about implementing a new regulatory framework for cryptocurrencies on Tuesday at Hong Kong Fintech Week.
According to Radio Television Hong Kong (RTHK), all cryptocurrency trading platforms operating in Hong Kong or targeting local investors will need to apply for a license with the SFC. “Later today, the government will propose a new licensing regime under the Anti-Money Laundering Ordinance for platforms that trade any type of cryptocurrency even if not classified as securities,” Alder said.
The SFC introduced an opt-in regulatory framework for crypto exchanges in November last year. However, it only applies to platforms that offer at least one cryptocurrency that falls under the legal definition of securities.
Alder noted that the current regulatory system has severe limitations, making it possible for some trading platforms to operate outside the regulator’s remit. “If a platform operator is really determined to stay completely off the regulatory radar, they can do so simply by making sure their traded crypto assets fall outside the legal definition of a stock,” he explained.
Many cryptocurrency exchanges operate in Hong Kong but choose not to apply for a license, which is possible with the current system. According to Reuters, the SFC has not issued a full license to any exchange to date, but has agreed in principle to issue a license to OSL Digital Securities, a cryptocurrency branch of the Fidelity-backed BC group. Alder elaborated:
Once this new regime is in place, all virtual asset trading platforms in Hong Kong will be regulated, supervised and monitored.
What do you think of Hong Kong’s new cryptocurrency regulation? Let us know in the comments section below.
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