on the crypto
The Hong Kong Securities and Futures Commission has announced that it is working on a plan to regulate all local cryptocurrency exchanges.
Hong Kong's commitment to the crypto sector
Cryptocurrency trading platforms in Hong Kong will soon be undergoing a full legal check as the nation's financial guarantor plans to release a new regulatory framework soon.
Hong Kong's Securities and Futures Commission (SFC) has announced that it intends to regulate all cryptocurrency exchanges in the country. Hong Kong has encountered unclear rules and intricate regulatory confusion in the past when it comes to cryptocurrency exchanges such as Bitcoin Revolution.
After a failed first attempt in 2018, last year the country released an opt-in framework for crypto platforms offering trading services in the region. However, regulation was limited to exchanges that traded assets officially classified as "securities" or that granted their services to institutional investors, the report said.
The problems of the previous legislation
Only a few trading platforms applied for a license after the framework was released in November 2019. Although the exchanges they have applied over time have not yet obtained a full license from the SFC, the regulator has agreed to issue a license for the cryptocurrency exchange OSL, which was the first company to apply for the license.
Subsequently, it was considered that the current regulatory framework was reductive since it did not apply to most of the financial exchanges operating in the region; nor did it provide clear rules for local businesses.
At the same time, there is growing concern that some exchanges are operating completely out of regulation. As the regulation is unclear, most exchanges are limited to exploiting the limitations of existing laws by focusing on cryptocurrencies like BTC and ETH instead of regulated security tokens.
More clarity is needed in cryptocurrency laws
The guarantor now intends to propose a new framework with rules defined in a clear and linear way for exchanges. The new regulation will require all cryptocurrency platforms in the country and foreign exchanges targeting Hong Kong investors to apply for an SFC license, whether or not they deal with security tokens.
In recent times, countries around the world are adopting clearer policies for cryptocurrencies and trading platforms. For example, in August, Ireland announced that it intends to oversee cryptocurrency exchanges and wallet providers as part of its efforts to curb money laundering activities.
The UK's Financial Conduct Authority is also exploring further cryptocurrency regulations and may require cryptocurrency companies to submit a report on how they handle threats and potential financial attacks.
