Hong Kong proposes tighter rules for digital asset exchanges
Hong Kong’s Securities and Futures Commission (SFC) has launched a consultation on plans to regulate digital asset trading platforms.
SFC seeks feedback on proposed digital asset trading regulations
The proposed regulatory framework, which was last updated in 2019, will bring digital, or virtual, assets in line with securities brokers and automated trading venues.
These platforms are already subject to regulation concerning the safe custody of assets; know your customer (KYC); conflicts of interest; cybersecurity; accounting and auditing; risk management; anti-money laundering/counter-financing of terrorism (AML/CFT); token due diligence; governance and disclosures; and prevention of market misconduct.
As part of the consultation, the SFC is seeking feedback on whether to allow digital asset platform operators to serve retail investors, and whether the regulatory measures above need shoring up to protect individuals.
As of June this year, all centralised digital asset trading platforms in Hong Kong will need to be licenced by the SFC. “Those which do not plan to apply for a licence should start preparing for an orderly closure of their business in Hong Kong,” the regulator says.
SFC CEO Julia Leung says the proposed regulatory framework for digital asset trading hems close to the regulator’s philosophy of “same business, same risks, same rules”.
“In light of the recent turmoil and the collapse of some leading crypto trading platforms around the world, there is clear consensus among regulators globally for regulation in the virtual asset space to ensure investors are adequately protected and key risks are effectively managed,” Leung adds.
