Hong Kong Regulator Announces New Plans for Cryptocurrency Industry

Hong Kong Regulator Announces New Plans for Cryptocurrency Industry

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Citing “significant risks virtual assets pose to investors,” the commission announced that it will “adopt new measures within its regulatory remit,” elaborating:

The SFC will impose licensing conditions on firms which manage or intend to manage portfolios investing in virtual assets.

In addition, the regulator noted that it will explore whether crypto exchanges “are suitable for regulation in the SFC regulatory sandbox.”

Under existing regulatory remits in Hong Kong, markets for virtual assets may not be subject to the oversight of the SFC if the virtual assets involved fall outside the legal definition of ‘securities’ or ‘futures contracts’ (or equivalent financial instruments).

The regulator proceeded to outline the “significant risks” associated with investing in crypto assets which it has identified such as volatility, liquidity, cybersecurity, safe custody of assets, market integrity, money laundering, terrorist financing, conflict of interest and fraud.

Under the new rules, crypto asset portfolio managers will be subject to the SFC’s supervision “irrespective of whether the crypto assets meet the definition of securities or futures contracts.”

Noting that firms which distribute funds that invest in crypto assets in Hong Kong will need to be licensed, the commission detailed:

Licence applicants and licensed corporations are required to inform the SFC if they are presently managing or planning to manage one or more portfolios that invest in virtual assets.

“If the SFC grants a licence to a qualified platform operator, it will impose appropriate licensing conditions and the operator will proceed to the next stage of the sandbox,” the regulator described. “This would typically mean more frequent reporting, monitoring and reviews,” the commission added, stating:

After a minimum 12-month period, the virtual asset trading platform operator may apply to the SFC for removal or variation of some licensing conditions and exit the sandbox. Licensing conditions (and terms and conditions) imposed in this stage would be made public in the usual way.

Intermediaries should also provide their clients with all the necessary information to make informed investment decisions “in a clear and easily comprehensible manner.” Furthermore, the SFC explained that they must conduct due diligence on the fund manager, the fund itself, and the fund’s counterparties, noting:

Intermediaries are reminded to implement adequate systems and controls … before they engage in the distribution of virtual asset funds. Failure to do so may affect their fitness and properness to remain licensed or registered and may result in disciplinary action by the SFC.

What do you think of the SFC’s new rules to regulate the crypto industry in Hong Kong? Let us know in the comments section below.

Images courtesy of Shutterstock and Hong Kong SFC.

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The post Hong Kong Regulator Announces New Plans for Cryptocurrency Industry appeared first on Bitcoin News.

 

source: https://news.bitcoin.com/hong-kong-cryptocurrency-industry/

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