Hong Kong’s financial regulator, the SFC will now require all crypto exchanges operating in the city to be regulated. Investor protection and preventing money laundering are particular concerns.
November 3, 2020 | AtoZ Markets – Hong Kong’s Securities and Exchange Commission (SFC) has found that it requires regulation of all crypto exchanges operating within its jurisdiction.
Hong Kong wants crypto exchanges regulated
Other financial centers in Asia such as Japan and Singapore have licensing regimes that require all cryptocurrency trading platforms to be regulated.
In contrast, while Hong Kong’s watchdog launched a regulatory framework specifically for crypto trading platforms in 2019, this was restricted to those platforms that traded an asset officially classed as security tokens and cryptocurrency futures.
“This is a significant limitation, as under the current legislative framework if a platform operator is really determined to operate completely off the regulatory radar it can do so simply by ensuring that its traded crypto assets are not within the legal definition of a security,” Ashley Alder, chief executive of the SFC, said in the Fintech Week event on Tuesday .
Consequently, the Hong Kong government, today, will propose a new licensing regime today under its anti-money laundering legislation, requiring all cryptocurrency trading platforms that operate there, or target investors in the city, to apply for an SFC license, Alder said.
Why regulate the crypto industry?
Financial regulators around the world are still assessing whether and how they should regulate the crypto assets industry. Their particular concerns are to protect investors and prevent money laundering.
Hong Kong has several crypto exchanges such as Huobi, OKEx, and BitMex. However, many chose not to apply for a license under the existing regime.
At the moment, the SFC has not issued a full license to any exchange, has agreed in principle to issue a license to cryptocurrency firm OSL Digital Securities. OSL is Asia’s largest digital asset platform backed by investment giant Fidelity.
Think we missed something? Let us know in the comment section below.