The Hong Kong Securities and Futures Commission (SFC) has announced rules for controlling the virtual money market. Representatives of the regulator recognize that the crypto industry is still very young and there are many scammers in it. However, the commission is confident that the path of prohibition is not the way to go.
“The market for virtual assets is still very young and trading rules may not be transparent and fair. Outages are not uncommon as is market manipulation and abuse. And there are also, I am afraid, outright scandals and frauds,” the SFC chief Ashley Alder told the Hong Kong fintech forum on Thursday.
According to the new requirements, the fund managers whose portfolio contains more than 10% of assets in cryptocurrency, must obtain a license from the SFC.
Crypto platforms that serve only professional investors can join the experimental sandbox. In there the companies will be able to conduct experiments in the field of countering money laundering on their sites in order to prove their competence in this matter to the regulator. The companies have a right to apply for a license if they successfully pass the test in the sandbox.
Industry participants will be prohibited from financially stimulating their clients in any way, offering them trade in futures or derivatives. Cryptocurrency trading platforms will have to treat their customers fairly and counteract market manipulations.
The SFC solution seems rather strict to some industry participants, however, they understand that the authorities are striving to make the market as safe as possible for investors. Players on the local crypto market have noted that in any case, it's better to follow the path of regulation rather than the path of prohibition.
It should be noted that Hong Kong, in principle, does not adhere to repressive measures regarding the crypto sphere, as opposed to China. Earlier, the SFC has already stated that it will not prohibit bitcoin exchanges and other trading platforms. Representatives of the regulator noted that in the modern world, with the proliferation of technology, trading still has no boundaries, which means that they have no meaning.
At the same time, the regulator initially advocated the creation of a profile regulatory framework. SFC believes that crypto platforms work with new technologies and therefore the rules of the traditional financial market cannot be applied to them. The local crypto companies actively support such a sensible approach to the industry and are ready to interact with the regulator on a variety of issues.
The SFC was harsh only against the ICO. The regulator has warned investors about the risks that such fundraising campaigns may incur since many of them are direct fraud in the opinion of the commission. Representatives of the financial regulator noted that many ICO projects, hiding behind the blockchain, are not really engaged in the development of technological innovations.
At the same time, traditional financial institutions in Hong Kong are actively applying new technologies. Today the Hong Kong Stock Exchange (HKEX) announced a partnership with a New York-based company Digital Asset Holdings. As part of the deal, partners will develop a blockchain platform for processing trading results in the Northbound Stock Connect system.
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