Hong Kong: Regulatory Framework For Crypto Assets-Hong Kong’s Securities and Futures Commission (SFC) released a statement about its new approach to regulating the local cryptocurrency trading market. It released a new cryptocurrency regulation framework that defines the digital asset funds and trading platform, according to an announcement on its website.
Securities and Futures Commission
This announcement comes after the SFC chairman, Carlson Tong Ka-Shing, said that Hong Kong needs a more robust regulatory framework for cryptocurrency trading. According to the statement, the SFC wants to offer more robust investor protection.
“The measures announced today allow us to regulate the management or distribution of virtual asset funds in one way or another. That investors’ interests would be protected either at the fund management level, at the distribution level, or both. We hope to encourage the responsible use of new technologies and also provide investors with more choices and better outcomes.”
SFC Chief Executive, Ashley Alder
The SFC’s legitimate status restrains the controller oversight to just securities and futures (SF) trading. But the Commission came up with “an innovative framework”. That brings “a significant” number of crypto assets under its control, Alder explained.
New Rules And Regulations
Hong Kong: Regulatory Framework For Crypto Assets-For instance, funds that invest more than 10% of their portfolio in virtual currencies need to adhere to the new special crypto rules. It is irrespective of whether the crypto investment is SF or not. Moreover, as the funds that manage only coins cannot be obliged to obtain an asset management license. The SFC puts those organizations in a brokerage category, Alder said.
But dealing with crypto exchanges is more complicated compared to funds. Hence the SFC will create a sandbox where it tests out several rules. The Commission will trial several rules. Which comprise of trading with professional players, limitations on the offerings of ICO tokens, and banning trading in leverage. The sandbox will act voluntarily and will announce the names of all the engaged exchanges publicly.
“The jury is still out on whether virtual assets serve a useful social function. And should be considered in the same bracket as more familiar financial assets. But it is clear that if we do regulate operators in the virtual asset space, we should hold them to the same standards as the rest of the financial system,”
“While virtual assets have not posed a material risk to financial stability, there is a broad consensus among securities regulators that they pose significant investor protection risks. The regulatory response to these risks varies in different jurisdictions, depending on the regulatory remit. Even on the scale of the activities and their impact on investor interests. It will found that whether virtual assets are deemed financial products suitable for regulation.”
-Statement from SFC