Hong Kong'sSecurities and Futures Commission (SFC) announced the launch of publicconsultation on Monday regarding regulating trading platforms for cryptocurrencies anddigital assets. Interested parties can submit their comments until 31 March2023.
Hong Kong Opens CryptoRegulation Consultation Period
Startingfrom 1 June 2023, any centralized virtual asset trading platform that conducts businessin Hong Kong or targets Hong Kong investors must obtain a license from the SFCunder a new licensing system. The SFC's proposed regulatory standards forvirtual asset trading platforms are modeled after the current Securities andFutures Ordinance regulations and are similar to those for licensed securitiesbrokers and automated trading venues. Additionally, the SFC has suggestedrevisions to some of the existing requirements as part of this initiative.
The first informationsuggesting that Hong Kong wants to legalize crypto trading and broaden itsstatus as a prominent financial hub to a digital assets center emerged inOctober 2022. Although cryptocurrency trading is banned in China, Hong Kong istaking advantage of its independent status to allow brokers and platforms toapply for local licenses.
During theconsultation period, SFC specifically requests input on whether licensedplatform operators should serve retail traders and what additional measuresshould be met to protect individual investors.
"Ashas been our philosophy since 2018, our proposed requirements for virtual assettrading platforms include robust measures to protect investors, following the 'samebusiness, same risks, same rules' principle," Julia Leung, the ChiefExecutive Officer at SFC, said.
Operatorsof cryptocurrency exchanges and platforms wishing to obtain authorizationshould start reviewing their control systems to prepare for a smoothtransition. In contrast, according to the SFC, those who do not plan to obtaina license should begin shutting down their Hong Kong operations in an orderlymanner.
"Inlight of the recent turmoil and the collapse of some leading crypto tradingplatforms around the world, there is clear consensus among regulators globallyfor regulation in the virtual asset space to ensure investors are adequatelyprotected and key risks are effectively managed," Leung added.
Watch the recent FMLS22 panel on forex and crypto trends in 2023.
Interactive BrokersLaunches Crypto Services in Hong Kong
Just a weekbefore the recent SFC announcement, one of the leading US electronic tradingplatforms, Interactive Brokers, decided to expand its crypto offering to theAsian markets and launched new digital assets trading services in Hong Kong.
Although theoffering is currently limited to only two assets: Bitcoin and Ethereum, InteractiveBrokers did not rule out the possibility of broadening the number of offeredtokens in the foreseeable future.
For now,only professional traders will be able to trade cryptos with InteractiveBrokers in Hong Kong, but the potential change of local regulations, which are thetopic of the newest public consultation, may open up the platform to a largenumber of retail customers.
"Investordemand for digital assets continues to grow in Hong Kong and around the world,and we are pleased to introduce cryptocurrency to address the trading objectivesof clients in this important market," said Interactive Brokers' Head ofAPAC, David Friedland.
After Crypto ETFs, It Is a Time for Crypto Tokens
Back inOctober 2022, one of the Four Asian Tigers was conducting similar consultation focused on allowing retail traders access to crypto exchange-traded funds(ETFs). These types of instruments are still waiting for regulatory approval inthe US, but are already available in Europe.
Only twomonths after the publication of the consultation paper, CSOP Asset Management,an investment advisor based in Hong Kong, launched the first crypto ETFs on theHong Kong Stock Exchange (HKEX). CSOP Bitcoin Futures ETF and CSOP Ether FuturesETF track the standardized, cash-settled Bitcoin futures contracts and Etherfutures contracts traded on the Chicago Mercantile Exchange, respectively.
"Theyprovide investors with exposure to the digital asset space for the first timein Asia and reflect both our ongoing commitment to, and the market's appetitefor, the digital economy. We look forward to welcoming more themed ETFs andmore digital asset products to our markets in the months ahead," Wilfred Yiu,the Chief Operating Officer and Co-Head of Markets at HKEX, commented.
Hong Kong'sSecurities and Futures Commission (SFC) announced the launch of publicconsultation on Monday regarding regulating trading platforms for cryptocurrencies anddigital assets. Interested parties can submit their comments until 31 March2023.
Hong Kong Opens CryptoRegulation Consultation Period
Startingfrom 1 June 2023, any centralized virtual asset trading platform that conducts businessin Hong Kong or targets Hong Kong investors must obtain a license from the SFCunder a new licensing system. The SFC's proposed regulatory standards forvirtual asset trading platforms are modeled after the current Securities andFutures Ordinance regulations and are similar to those for licensed securitiesbrokers and automated trading venues. Additionally, the SFC has suggestedrevisions to some of the existing requirements as part of this initiative.
The first informationsuggesting that Hong Kong wants to legalize crypto trading and broaden itsstatus as a prominent financial hub to a digital assets center emerged inOctober 2022. Although cryptocurrency trading is banned in China, Hong Kong istaking advantage of its independent status to allow brokers and platforms toapply for local licenses.
During theconsultation period, SFC specifically requests input on whether licensedplatform operators should serve retail traders and what additional measuresshould be met to protect individual investors.
"Ashas been our philosophy since 2018, our proposed requirements for virtual assettrading platforms include robust measures to protect investors, following the 'samebusiness, same risks, same rules' principle," Julia Leung, the ChiefExecutive Officer at SFC, said.
Operatorsof cryptocurrency exchanges and platforms wishing to obtain authorizationshould start reviewing their control systems to prepare for a smoothtransition. In contrast, according to the SFC, those who do not plan to obtaina license should begin shutting down their Hong Kong operations in an orderlymanner.
"Inlight of the recent turmoil and the collapse of some leading crypto tradingplatforms around the world, there is clear consensus among regulators globallyfor regulation in the virtual asset space to ensure investors are adequatelyprotected and key risks are effectively managed," Leung added.
Watch the recent FMLS22 panel on forex and crypto trends in 2023.
Interactive BrokersLaunches Crypto Services in Hong Kong
Just a weekbefore the recent SFC announcement, one of the leading US electronic tradingplatforms, Interactive Brokers, decided to expand its crypto offering to theAsian markets and launched new digital assets trading services in Hong Kong.
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Although theoffering is currently limited to only two assets: Bitcoin and Ethereum, InteractiveBrokers did not rule out the possibility of broadening the number of offeredtokens in the foreseeable future.
For now,only professional traders will be able to trade cryptos with InteractiveBrokers in Hong Kong, but the potential change of local regulations, which are thetopic of the newest public consultation, may open up the platform to a largenumber of retail customers.
"Investordemand for digital assets continues to grow in Hong Kong and around the world,and we are pleased to introduce cryptocurrency to address the trading objectivesof clients in this important market," said Interactive Brokers' Head ofAPAC, David Friedland.
After Crypto ETFs, It Is a Time for Crypto Tokens
Back inOctober 2022, one of the Four Asian Tigers was conducting similar consultation focused on allowing retail traders access to crypto exchange-traded funds(ETFs). These types of instruments are still waiting for regulatory approval inthe US, but are already available in Europe.
Only twomonths after the publication of the consultation paper, CSOP Asset Management,an investment advisor based in Hong Kong, launched the first crypto ETFs on theHong Kong Stock Exchange (HKEX). CSOP Bitcoin Futures ETF and CSOP Ether FuturesETF track the standardized, cash-settled Bitcoin futures contracts and Etherfutures contracts traded on the Chicago Mercantile Exchange, respectively.
"Theyprovide investors with exposure to the digital asset space for the first timein Asia and reflect both our ongoing commitment to, and the market's appetitefor, the digital economy. We look forward to welcoming more themed ETFs andmore digital asset products to our markets in the months ahead," Wilfred Yiu,the Chief Operating Officer and Co-Head of Markets at HKEX, commented.
