As published on news.bitcoin.com, Tuesday 3 November, 2020.
The CEO of the SFC, Ashley Alder, talked about implementing a new cryptocurrency regulatory framework at Hong Kong Fintech Week on Tuesday.
All cryptocurrency trading platforms operating in Hong Kong or targeting local investors will be required to apply for a license with the SFC, Radio Television Hong Kong (RTHK) reported. “Later today, the government will propose a new licensing regime under the Anti-Money Laundering Ordinance for platforms which trade any type of crypto asset even if not classified as securities,” Alder was quoted as saying.
The SFC introduced an opt-in regulatory framework for crypto exchanges in November last year. However, it only applies to platforms that offer at least one cryptocurrency that falls under the legal definition of securities.
Alder noted that the current regulatory system has serious limitations, making it possible for some trading platforms to operate away from the purview of the regulator. “If a platform operator is really determined to remain completely off the regulatory radar, it can do so simply by ensuring that its traded crypto assets are not within the legal definition of a security,” he explained.
Many cryptocurrency exchanges operate in Hong Kong but they choose not to apply for a license, which is possible under the current system. According to Reuters, the SFC has not issued a full license to any exchange to date, but it has agreed in principle to issue a license to OSL Digital Securities, a cryptocurrency arm of Fidelity-backed BC group. Alder elaborated:
"Once this new regime is in place, all virtual asset trading platforms in Hong Kong would be regulated, supervised and monitored."