Hong Kong’s financial regulator has unveiled a set of regulations governing cryptocurrencies.
The new rules, announced by the Securities and Futures Commission, aim to protect investors. It plans to bring virtual asset, portfolio managers and distributors of virtual asset funds under its regulatory net. It also sets out a conceptual framework for the potential regulation of virtual asset trading platforms.
With the ‘significant risks’ virtual assets pose to investors, the SFC said it will now adopt new measures within its regulatory remit to protect those who invest in virtual asset portfolios or funds.
The watchdog will impose licensing conditions on firms which manage or intend to manage portfolios investing in virtual assets, irrespective of whether the virtual assets meet the definition of “securities’ or futures contracts.
“The measures announced today allow us to regulate the management or distribution of virtual asset funds in one way or another so that investors’ interests would be protected either at the fund management level, at the distribution level, or both,” said Mr Ashley Alder, the SFC’s CEO. “We hope to encourage the responsible use of new technologies and also provide investors with more choices and better outcomes.”
The regulator has also set out a conceptual framework to explore a pathway for compliance for virtual asset trading platform operators who are willing to be supervised the SFC, Alder added.
Under this framework, the SFC said it will explore whether virtual asset trading platforms are suitable for regulation in the SFC Regulatory Sandbox. The SFC will observe the operations of interested trading platform operators and their compliance with proposed regulatory requirements in the Sandbox environment.
Going forward, the SFC said it may consider granting a licence and putting them under its close supervision. Alternatively, it may take the view that the risks involved cannot be sufficiently addressed and no licence shall be granted as protection for investors cannot be ensured, according to the statement.
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