Hong Kong outlines upcoming crypto licensing regime

Hong Kong’s Securities and Futures Fee (SFC) requires public suggestions on its newly proposed licensing regime for cryptocurrency exchanges set to take impact from June 2023.

A key consideration of the general public session window is whether or not to permit licensed exchanges to serve retail buyers within the nation and what measures ought to be carried out to supply a variety of “strong investor safety measures.“

The SFC introduced the session course of on Feb. 20, outlining a brand new licensing regime for the business which proposes that every one centralized cryptocurrency buying and selling platforms working in Hong Kong should be licensed with the regulatory physique.

The SFC’s proposed regulatory tips are primarily based on present necessities for licensed securities brokers and automatic buying and selling venues, whereas modifications have been made to a few of the present conditions.

An announcement from SFC CEO Julia Leung highlighted the “current turmoil” within the cryptocurrency ecosystem and the collapse of business gamers like FTX as a major purpose for clear regulatory tips for the business with investor safety high of thoughts:

“As has been our philosophy since 2018, our proposed necessities for digital asset buying and selling platforms embody strong measures to guard buyers, following the ‘identical enterprise, identical dangers, identical guidelines’ precept.”

In response to the announcement, any particular person or enterprise offering cryptocurrency-related companies should apply for a license from the SFC. Moreover, a lot of necessities are set out for cryptocurrency exchanges and repair suppliers.

This features a host of conditions, together with the secure custody of belongings, Know Your Buyer, conflicts of curiosity, cybersecurity, accounting and auditing, threat administration, Anti-Cash Laundering/counter-financing of terrorism and prevention of market misconduct.

Associated: Hong Kong watchdog goals to limit retail merchants to liquid merchandise

Companies that intend to proceed working and making use of for a license are inspired to evaluation and revise present techniques and controls to fulfill the necessities of the upcoming regime. Exchanges and repair suppliers that don’t intend to use for a license should put together to shut down their companies in Hong Kong.

Hong Kong’s SFC additionally intends to publish and keep an inventory of licensed cryptocurrency exchanges and repair suppliers to tell most of the people of the registration statuses of various companies.

As beforehand reported by Cointelegraph, Hong Kong-based monetary service suppliers had begun to investigate about licensing necessities after an modification to the Anti-Cash Laundering and Counter-Terrorist Financing Ordinance in December 2022.