Key Takeaways:
- Hong Kong’s Financial Secretary, Paul Chan, has pledged to work towards establishing the territory as a hub for the cryptocurrency industry.
- A consultation paper from Hong Kong authorities has been made publicly available; the deadline is March 31.
The Securities and Futures Commission of Hong Kong formally announced its intention to permit individual investors to trade cryptocurrencies like Bitcoin and Ethereum in a statement on Monday.
In addition, the regulator stated that by June 2024, all cryptocurrency trading platforms operating in Hong Kong must have approval from the Securities and Futures Commission, failing which they will have to exit the market. The regulator stated in a recent consultation that the SFC would not wait too long to initiate infringement proceedings.
These platforms can only provide what the SFC refers to as “qualified large-cap virtual assets” to retail investors since they must be regulated under a cryptocurrency regulatory system that takes effect on June 1 of this year.
According to the SFC, such tokens are represented in at least two reliable indices that were created by at least two different index providers. The policy’s consultation session will finish on March 31.
The SFC’s revised regulatory standards have been modified to address some of the prevailing prerequisites for licenced securities brokers and automated trading platforms.
The Hong Kong government is still dedicated to developing the infrastructure for cryptocurrencies, notwithstanding the current industry turmoil caused by the FTX crash.
According to Hong Kong’s financial secretary, Paul Chan, local regulators and the government will be open to working with fintech and cryptocurrency businesses in 2023.
The chief executive of the SFC, Julia Leung, explained, there is strong agreement among regulatory authorities worldwide for regulatory oversight in the virtual asset sector to ensure investors are sufficiently guarded and key risks are properly handled.
Furthermore, the regulator asked exchanges to justify which cryptocurrency derivative products they wanted to provide to investors. The regulator stated that it might change the ban on selling crypto derivatives by authorised exchanges in the city.
In order to inform the general public of the registration statuses of various businesses, Hong Kong’s SFC also plans to publish and maintain a list of authorised cryptocurrency exchanges and service providers.
The comprehensive paper outlines the main regulatory criteria for licencing, along with recommendations for establishing AML controls and a variety of additional obligations for the sector.
