On May 23, the Securities and Futures Commission (SFC) of Hong Kong released a conclusion on consultation of virtual assets trading platforms. According to reports, the SFC asked for consultations from various stakeholders like market participants, licensed corporations, and consultancy firms.
The Securities and Futures Commission released a consultation paper and requested suggestions on proposed regulatory requirements for the licensing registration of virtual assets trading platform operators. On 20 Feb 2023, the SFC issued this consultation paper to manage virtual assets trading platforms. The consultation paper requires several measures like guidelines on virtual assets trading, anti-money laundering (AML), and counter-finance terrorism (CFT) for licensed corporations and SFC-licensed virtual asset service providers. Additionally, the conclusion report of the SFC on consultation paper said that it has received 152 written suggestions from industry and professional associations. For those who are not aware, the SFC ended the consultation process on March 31.
According to the report, respondents generally supported the licensing registration process for virtual assets trading platforms. Many of them asked for clarification on the technical aspects and implementation process of the licensing regime. Also, most of the respondents have commented related to retail access to licensed virtual assets platforms, the criteria for token admission, and compensation for risk related to funds of clients.
The SFC carefully reviewed the feedback before making any necessary revisions to the proposed regulatory requirements. On the nature of digital assets comparison with traditional finance system, the SFC said that the Commission is aware that digital assets are not regulated at a product level and are traded on numerous platforms.
Hong Kong has been very active in developing itself as a global fintech hub. After the ban on crypto platforms, several companies from Mainland China started moving toward Hong Kong to perform their businesses. Also, Hong Kong has decided to allocate additional funds worth HK$ 50 million (US$6.37 million) to provide the necessary infrastructure to facilitate these investments. Additionally, the country has distinguished itself from mainland China in terms of managing cryptocurrency trading and decided to explore the possibilities of success in this sector.