Hong Kong will regulate all cryptocurrency trading platforms operating in the financial hub, the city’s markets watchdog said, changing its previous “opt in” approach.
Ashley Alder, chief executive officer of the Securities and Futures Commission (SFC), said during the 2020 Hong Kong FinTech Week that the requirement will apply to all platforms even if they do not trade security tokens, according to Reuters.
Consequently, the Hong Kong government 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 added.
Simply speaking, we will require all virtual asset trading platforms to be operating transparently, like working under the sunlight”
“Simply speaking, we will require all virtual asset trading platforms to be operating transparently, like working under the sunlight,” saidChristopher Hui Ching-yu, Hong Kong’s secretary for financial services and the treasury, in a statement.
As a FATF member, Hong Kong is “under an obligation” to align with the AML standards for virtual asset service providers, she added.
If serious breaches are committed on the platforms, such as market manipulation, “there will be intervention and restriction on their business,” according to Chiu.
Crypto platforms will initially only be allowed serve professional investors under the proposed regime, and will have to maintain high levels of investor protection and security, she said.
The operators must make sure there are no retail investors trading on their platforms, which should only be available to professional investors who have over HK$8 million ($1m) in assets, according to Clara Chiu, director of licensing and head of the fintech unit of the SFC.
The new regulations will cover all types of virtual assets’ trading platforms operating in Hong Kong, as well as overseas platforms targeting local investors.
The move to tighten regulation follows several scandals, including the indictment of senior executives at BitMEX, which at one time during the bull market of 2017 and 2018 used to run the world’s biggest crypto-exchange at the Cheung Kong Center, one of the most expensive office towers in the city.