Editor’s Note
The Hong Kong Securities and Futures Commission is set to finalize its regulatory framework for virtual asset trading platforms next month, with new rules taking effect in June. This follows a public consultation that garnered significant industry feedback.
April 27, 2023 19:41
Julia Leung, Chief Executive of the Hong Kong Securities and Futures Commission (SFC), stated that the SFC has completed the public consultation on regulatory proposals for virtual asset trading platforms (VATPs) and received over 150 responses. The consultation results and final guidance will be announced in May, with the new regime taking effect on June 1, 2023.
According to the consultation document, platforms applying for a license will be required to provide client asset custody. Leung pointed out that the SFC is discussing with the Insurance Authority the practicalities of clients purchasing insurance for their virtual assets.
She also noted that this regime is an important cornerstone for the development of the third-generation internet (Web3) ecosystem, and reiterated the SFC’s support for related distributed ledger technology and responsible innovation concepts. While the efficiency, transparency, and user experience provided by the financial industry will be significantly enhanced, the public is reminded to remain vigilant and properly manage related risks.
At the international level, the SFC actively promotes the work of the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB). Leung highlighted that the SFC is a member of both the Crypto and Digital Assets Working Group under the IOSCO Board and the Decentralized Finance Working Group under the FSB. To reduce regulatory arbitrage, the SFC is collaborating with global regulatory bodies to develop baseline standards for regulating centralized virtual asset trading venues, which are being adopted in major markets.
She concluded that Hong Kong can play a significant role in multiple aspects, including promoting investment to make more sustainable decisions, providing investors with consistent, comparable, and decision-useful corporate climate information, and combating “greenwashing.” The SFC also actively participates in local, Asia-Pacific, and global sustainable finance initiatives. Notably, the Hong Kong Exchange conducted a consultation in April on climate-related disclosure requirements for listed companies, which is an important step for Hong Kong to align with the global baseline of the International Sustainability Standards Board (ISSB).