Hong Kong wants cryptocurrency trading platforms to be regulated
Hong Kong will regulate all cryptocurrency trading platforms operating in the financial hub, the city’s markets watchdog said on Tuesday, changing its previous “opt in” approach.
Financial regulators around the world are still assessing whether and how they should regulate the cryptocurrency industry. Investor protection and preventing money laundering are particular concerns.
Other financial centres in Asia such as Japan and Singapore have licensing regimes which require all cryptocurrency trading platforms to be regulated.
In contrast, while Hong Kong’s Securities and Futures Commission (SFC) launched a regulatory framework specifically for cryptocurrency trading platforms last year, this was restricted to those platforms that traded an asset officially classed as a security or future, not just tokens like bitcoin.
“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,” Ashley Alder, chief executive of the SFC, said in a speech on Tuesday.
Consequently, the Hong Kong government, today, will propose a new licensing regime today under its anti-money laundering legislation, requiring all cryptocurrency trading platforms that operate there, or target investors in the city, to apply for an SFC licence, Alder said.
Dozens of cryptocurrency exchanges operate in Hong Kong, including some of the world’s largest, though many chose not to apply for a licence under the existing regime.
The SFC has not issued a full licence to any exchange, but has agreed in principle to issue a licence to cryptocurrency firm OSL Digital Securities, a unit of Fidelity-backed BC group 0863.HK, OSL said in August.