- Hong Kong is planning to regulate all cryptocurrency trading platforms that operate in the financial centre.
- New regulations will move Hong Kong on from its 2019 regulatory framework.
- All cryptocurrency trading platforms will have to apply for a license as a result.
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The Hong Kong government has today proposed that all cryptocurrency trading platforms apply for a license that will be issued by the SFC, per Reuters. This is in order to close a large loophole left by Hong Kong’s current regulatory approach to crypto trading platforms.
In 2019, Hong Kong’s Securities and Futures Commission (SFC) launched a framework that was designed to govern cryptocurrency trading platforms. However, this regulatory framework only captured platforms that were trading assets officially licensed as a security. This meant that many cryptocurrencies, which are not classed as securities, were untouched. Now there are plans to change this.
“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,” said Ashley Alder, chief executive of the SFC.
In addition to capturing all crypto trading platforms operating in Hong Kong, the new authorization regime—which will be delivered as part of wider money laundering regulations—will also reportedly capture platforms that target investors in Hong Kong.
At the time of writing, the SFC has already agreed (in principle) to issue an authorizing license to OSL Digital Securities, a cryptocurrency firm and unit of BC Technology Group Limited, which is in turn backed by Fidelity.
However, up to this point no cryptocurrency trading platform has received a full license on behalf of the SFC, but it appears change is coming to one of Asia’s largest financial centres.
That is, if regulators aren’t fooled by any Tai Chi.