The Securities and Futures Fee (SFC) of Hong Kong concluded a session interval right now, revealing the finalized regulatory necessities for operators of digital asset buying and selling platforms licensed by the SFC.
Over the session interval, the SFC collected 152 written submissions from stakeholders together with business {and professional} associations, skilled and consultancy corporations, market individuals, licensed companies, and people. These respondents largely welcomed the proposed measures, though a number of requested clarifications. Following an evaluation of the suggestions, the SFC made modifications and clarifications to a few of the proposed necessities.
In a notable resolution, the SFC has permitted the proposal to permit licensed platform operators to cater to retail traders, with nearly all of respondents exhibiting settlement. To safeguard these traders, the SFC will introduce sturdy measures reminiscent of suitability assessments throughout onboarding, rigorous token due diligence, admission standards, improved governance, and obligatory disclosures.
“Hong Kong’s complete digital belongings regulatory framework adheres to the precept of ‘identical enterprise, identical dangers, identical guidelines’, with a key give attention to sturdy investor safety and danger administration,” mentioned Ms. Julia Leung, the SFC’s Chief Government Officer. “This may foster sustainable business improvement and help innovation.”
The newly launched Tips for Digital Asset Buying and selling Platform Operators will come into impact from 1 June 2023, setting out key expectations such because the safe custody of belongings, segregation of consumer belongings, avoiding conflicts of curiosity, and complying with cybersecurity requirements and necessities.
The SFC will present additional steering on new regulatory necessities, license software procedures, and transitional preparations. The appliance varieties for buying and selling platforms might be obtainable on 25 Might 2023 and the SFC will start accepting functions on 1 June 2023.
In response to the rules, operators are inspired to use for a license if they’ll adjust to the SFC’s requirements. These unable or unwilling to conform ought to organize for an orderly closure of their operations in Hong Kong.
To guard traders, the SFC will proceed working with the Investor and Monetary Training Council to teach the general public concerning the dangers of buying and selling on unregulated platforms. On the time of this announcement, the SFC has not permitted any digital asset buying and selling platform to supply companies to retail traders. Most platforms at present accessible to the general public usually are not regulated by the SFC.
The market’s response to the brand new rules has been combined, with the Hong Kong idea token CFX(Conflux) experiencing a pullback.
At present, Hong Kong’s SFC has licensed solely two digital asset buying and selling platforms: OSL Alternate and HashKey Professional. With the brand new regulatory framework set to take impact in June, this marks a big milestone in Hong Kong’s efforts to control the fast-growing digital asset sector.
