Apparently, it will soon be mandatory for crypto exchanges in Hong Kong to apply for a license from the supervisory authority SFC. The pressure from China could well be behind the new regulation.
According to a report by Reuters news agency, there is a change of course in Hong Kong. Accordingly, all platforms that trade in cryptocurrencies are subject to regulation. The city’s market overseer announced this on Tuesday. So far, the “opt-in” procedure has applied in Hong Kong. Hong Kong’s financial supervisory authority, the Securities and Futures Commission (SFC), introduced a set of rules specifically for cryptocurrency trading platforms last year. However, this only applied to those platforms that trade an asset officially classified as a security or future. This regulation has not yet applied to trading venues specializing in purely digital assets.
This is a major limitation. Because if a platform operator is really determined to operate completely off the regulatory radar, it can do so in such a way that it only offers crypto assets that do not fall under the legal definition of a security.
Ashley Alder, Chief Executive of the SFC
Hong Kong is home to many major crypto exchanges
Alder added that the Hong Kong government is proposing a new licensing regime as part of its anti-money laundering legislation. According to this, all crypto exchanges that operate in Hong Kong or contact investors there are obliged to apply for an SFC license.
In a current article by the “beincrypto” portal, it is already suspected that China could be behind this new regulation. The reasons given are the increased efforts of the Chinese central bank to launch its own digital currency. In addition, such important crypto exchanges as Binance, OKEx and Huobi operate in Hong Kong. The Chinese authorities may not want to leave the field unregulated for these big top dogs. Other financial centers in Asia such as Japan and Singapore already have licensing regimes that require regulation of all cryptocurrency trading platforms.
Financial regulators around the world are still scrutinizing whether and how to regulate the cryptocurrency industry. Investor protection and the prevention of money laundering are particular concerns. China’s attitude to Bitcoin & Co. has so far been rather restrictive. What exactly the new SFC regulations look like, which criteria the platforms must meet, is not clear from the message. Fintech and crypto expert Adam Cochran refers to the SFC’s position paper from 2019 in his Twitter account. The platforms are only permitted to provide services for “professional investors”. Should this now come into force, it would be a severe blow for private investors and consumers who want to buy cryptocurrencies.
Picture by Pixabay
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