Countries across the globe are planning to regulate and legalize the crypto ecosystem by drafting legislation for the same. The recent example of the European Union is the benchmark for the regulation of cryptocurrencies and other virtual digital assets in the country. Remarkably, Hong Kong is also moving on a similar road.
In a recent interaction with Bloomberg, Hong Kong’s Securities and Futures Commission (SFC) chief executive officer, Julia Leung mentioned that the regulator is planning to publish guidelines on the licensing regime for virtual digital exchanges.
The guidelines as planned to be published in May will provide support to crypto trading platforms that will be able to offer trading services to retail investors on June 1. At the event, she also highlighted that the consultation process for the regulatory framework for crypto exchanges in the country received more than 150 responses.
During her interaction, she referred to the consultation paper published by SFC in February 2023. The aim of the Consultation Paper published was to obtain feedback from the market on the implementation of the AMLO Licensing Regime.
It is important to note here that the paper included Guidelines for Virtual Asset Trading Platform Operators that have provisions such as safe custody of assets, Know-Your-Client, AML/CFT
Admission of virtual assets for trading, prevention of market manipulative and abusive activities, accounting and auditing and risk management.
The consultation paper further added specifications of the proposal to allow retail access to licensed VA trading platforms, onboarding requirements, governance, disclosure obligations and other important aspects.
While confirmation awaits most prospective Virtual Asset Service Provider (VASP) licensees, some trading platforms have already begun offering crypto-related services to investors under the SFC’s supervision, including OSL and Hashkey Group.
Regulation and legislation are extremely important for a healthy atmosphere for the crypto ecosystem to flourish and Hong Kong’s move will encourage other Southeast Asian countries to follow the same path.
