Hong Kong Issues Crypto Fund Managers Regulations

October 7, 2019, | AtoZ MarketsThe Securities and Futures Commission (SFC) is the Hong Kong Securities Regulatory Commission. It is an independent statutory body that is accountable for regulating futures markets and securities in Hong Kong. The SFC has the task of promoting an ordered market for securities and futures, protecting investors. And It is also helping to promote Hong Kong as an international financial center and a key financial market in China. Although considered a branch of the government, it is managed independently based on the authorization of the laws relating to securities and futures.

Hong Kong SFC New Regulation

The Hong Kong Securities Regulatory Commission, the Securities and Futures Commission (SFC) has officially issued rules on cryptocurrency fund managers and issued a regulatory circular on its website on 4 October. The SFC provides terms and conditions for companies that manage portfolios of virtual assets in a 37-page document entitled “Formal Terms and Conditions for Licensed Companies Managing Virtual Asset Portfolios. According to the document, Hong Kong virtual investment fund managers must always maintain liquidity of at least 3 million HK $ (383,000 US dollars) and its variable liquidity needs.

The SFC recommends managers have sufficient human and technical resources. And It is capable of performing their tasks correctly and of adopting risk management and regulatory policies, as well as anti-money laundering and terrorist financing policies.

To guarantee the security of the fund’s assets, the SFC also requires that the manager of a cryptocurrency fund appoint a functionally independent custodian. Regulators emphasize that the fund manager of virtual assets should ensure that the assets of the fund are separated from their own assets and those of other clients. It is only for if the assets of the fund are not stored in a consolidated customer account.

Things crypto fund managers need to know

The SFC stated that if the administrator receives the designated currency on behalf of the fund, the administrator must open one or more separate bank accounts to deposit the client’s money. The document states that a bank account must be opened and maintained at a financial institution authorized in Hong Kong or a bank in its jurisdiction and that the SFC must be approved.

Also, virtual investment fund managers need to assess the capabilities of various storage mechanisms, including hardware and software infrastructure, key generation, storage, transaction security management and controls, and blockchain fork processing.

According to reports, Hong Kong has become one of the most advanced digital currency and blockchain jurisdictions. And Hong Kong is also one of the leading countries in the number of registered digital currency exchanges. At the beginning of this year, the Securities and Futures Commission issued a security token and a guide to the proposal to clarify the legislation and recommendations for market regulatory requirements.

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