Hong Kong is all set to tighten regulations on cryptocurrencies, as it is planning to have traders, exchanges and other related companies come under the supervision of the Securities and Futures Commission (SFC), as reported by Asian Nikkei Review on December 17.
Hong Kong is one of the newest nations from the Asian continent in creating strict cryptocurrency laws on traders and exchanges. These regulations come amid the growing concerns over fraud and money laundering activities that have propelled the regulators to take some actions.
As a part of Chinese territory, Hong Kong adheres a judicial approach different than the Mainland China. Hong Kong’s current law provides a lenient operational environment and a legal groundwork that erases government interference, which is different to the more strict approach taken by Mainland China.
As Hong Kong is considered among the world’s leading financial regions, the SFC is now ready to amend cryptocurrency laws, with regards to regulating Initial Coin Offerings (ICO) sector.
According to the Securities and Futures Commision (SFC) guidelines, the investment funds will need a license if more than 10 percent or more of their digital assets they manage are developed on Bitcoin or other altcoins. The services of selling products are limited to professional investors.
The SFC, under the voluntary scheme, which allows exchanges to test their cryptocurrency products or services in a “regulated sandbox,” and then will be able to decide whether to seek a license or not.
The Hong Kong SFC has been warning the crypto-industry about the plans to enforce strict cryptocurrency laws. In February this year, SFC had warned about seven cryptocurrency exchanges, after allegations by customers regarding manipulation and misappropriation of assets.
The regulatory measures on crypto-industry in Hong Kong come with both benefits and disadvantages. There are few who believe it is necessary to shield its customers and have a tab on the industry, while there are others who say that the new laws can well prove to be hefty and devour the crypto companies operating in Hong Kong.
Timothy Loh, who manages a law firm in the region, stated:
“The requirements of the SFC initiative may prove too burdensome for some operators.”
With new cryptocurrency laws, some exchanges will decide not to join the framework to maintain their current shares in the market. So how will the new cryptocurrency laws fare? Stay tuned for more updates about the Hong Kong crypto-industry.