Sfc cryptocurrency regulation

The Hong Kong Securities and Futures Commission SFC yesterday unveiled a comprehensive set of regulations governing cryptocurrencies in a move to enhance investor protection. While cryptocurrency is not yet believed to pose a major systemic risk to the financial market, there is a broad consensus among securities regulators that they pose significant investor protection risks. The regulatory response to these risks varies in different jurisdictions, depending on the regulatory remit, the scale of the activities and their impact on investor interests and whether virtual assets are deemed financial products suitable for regulation. Virtual assets are generally not backed by physical assets or guaranteed by the government. They have no intrinsic value, and there are currently no generally accepted valuation principles governing certain types of virtual assets. The cryptocurrency rally in was driven mainly by institutional investors in the expectation the virtual assets could soon find wider uses in payments, while retail investors joined the rally for short term gains.

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Content:

• Hong Kong to regulate cryptocurrency investment even if not a security
• Five top tips for a successful Hong Kong crypto-fund launch (Updated)
• HK Fintech Week: SFC Reviews Crypto Regulation, Allows Hong Kong Bitcoin ETF?
• Securities And Futures Commission (SFC)
• Hong Kong SFC sounds warning over cryptocurrency futures
• Hong Kong says it may regulate crypto exchanges
• Making an Initial Coin Offering in Hong Kong
• Hong Kong SFC announces measures to curb crypto-related frauds
• Hong Kong’s First Licensed Cryptocurrency Exchange.
• Hong Kong regulators call for all cryptocurrency trading platforms to be regulated

WATCH RELATED VIDEO: Watch Crypto exec explain how to best regulate Bitcoin

Hong Kong to regulate cryptocurrency investment even if not a security

The licence will permit OSL to operate a brokerage and automated trading service for virtual assets, including security tokens. Final approval by the SFC is subject to fulfilment of certain conditions. On 6 November , the SFC announced its regulatory approach to licensing virtual asset trading platforms which includes requirements on hot and cold digital wallet insurance, client asset segregation, know-your-customer, anti-money laundering, maintenance of orderly markets and other virtual asset specific controls see link — Regulation of virtual asset trading platforms.

As summarised in our publication Opt-in regulation of virtual asset trading platforms , the SFC integrates specific requirements for virtual asset platforms while maintaining traditional rigorous securities regulations in its new framework. Regulation in the cryptocurrency space provides certainty and confidence to investors who have become accustomed to traditional finance products. At the same time, investors can take comfort in additional protections under the new framework which has been tailor-made for the virtual asset class.

Through the opt-in licensing mechanism, investors will now have the ability to choose and differentiate between regulated platforms and unregulated platforms. This ground-breaking development is very much welcomed by the cryptocurrency industry in Hong Kong, and is a positive step towards establishing Hong Kong and the SFC as one of the frontrunners in Asia in regulating cryptocurrency platforms.

We expect to see more cryptocurrency firms applying for and being licensed by the SFC going forward. Joanna Fung, Deacons.

Law Firms. Legal Resources. For further information, please contact:. Joanna Fung, Deacons [email protected]. Video Analysis.

Five top tips for a successful Hong Kong crypto-fund launch (Updated)

By way of recap, the SFC already has a regulatory framework in place for virtual asset trading platforms the Framework — see our blog entry on its launch in November here. This licensing regime works on an opt-in basis, and is only available to exchanges that offer trading in at least one token that qualifies as a security under the Hong Kong securities regime. As a result, exchanges that offered only payment cryptocurrencies such as bitcoin were not covered. The New Regs are designed to close this regulatory gap and seek to regulate providers of non-securities virtual asset services for the first time. This has thrown the unwary reader. The consultation paper suggests initially that all VASPs are in scope which, following FATF parlance would include not just crypto-to-crypto and crypto-fiat exchanges, but also business transferring and safekeeping VAs as well as those providing financial services related to an offer or sale of VAs.

HK Fintech Week: SFC Reviews Crypto Regulation, Allows Hong Kong Bitcoin ETF?

This alert highlights the proposed licensing regime and the reception by industry players. A virtual asset is defined as a digital representation of value that is expressed as a unit of account or a store of economic value; functions as a medium of exchange accepted by the public as payment for goods or services or for the discharge of a debt, or for investment purposes; and can be transferred, stored or traded electronically. The definition covers virtual assets which are not securities, such as Bitcoin and Ether. With reference to the definition, the new proposal will include stablecoins i. VA Exchanges are trading platforms for buying or selling virtual assets and have custody or control of virtual assets during the process. Peer-to-peer platforms where the actual transaction is conducted outside the platform without it coming into possession of any VA at any point in time, are not covered under the above definition of VA Exchange. VA Exchanges that are already regulated as a licensed corporate in the current opt-in regime are also exempted.

Securities And Futures Commission (SFC)

The commission is independent and not under the purview of the Government of the Hong Kong Special Administrative Region. It is funded by licensing fees and transaction levies. The SFC administers the laws governing Hong Kong's securities and futures markets and facilitates the development of these markets. The SFC's statutory objectives are to maintain and promote fairness, efficiency, competitiveness, and transparency in the securities and futures markets; promote public understanding of investing and corporate finance policy; protect investors by enforcing regulations; reduce crime and misconduct and reduce the risks to Hong Kong's financial stability.

Hong Kong SFC sounds warning over cryptocurrency futures

Here are the five points you need to know about the changes announced on 01 November by the Securities and Futures Commission SFC to the regulatory framework for virtual assets:. The primary basis for increased supervision and regulation of virtual asset funds is the need for investor protection in light of the risks involved in virtual assets. The SFC has identified these key risks with investing in virtual assets:. Similarly, fund managers solely investing in non-SF virtual assets, and operators of platforms that provide trading services for non-SF virtual assets, do not carry on regulated activities under the SFO and until now were considered as beyond the jurisdiction of the SFC. The current SFC action is based on its perception that these gaps in the regulatory framework in Hong Kong resulted in inadequate protection of virtual asset investors. The new measures are principally targeted at three categories of service providers, namely, virtual asset portfolio managers, virtual asset fund distributors and trading platform operators.

Hong Kong says it may regulate crypto exchanges

The SFC noted that Binance, one of the most popular cryptocurrency exchanges globally, has offered trading services in Stock Tokens in a number of jurisdictions. While the public is aware that the companies managing virtual assets platforms are incorporated in overseas jurisdictions Binance, for example, is incorporated in the Cayman Islands , these platforms must obtain a the SFC reminded those platforms of the importance of obtaining a licence if they are actively marketing, whether itself or another person on its behalf and whether in Hong Kong or from a place outside Hong Kong, to the Hong Kong public any services that they provide, which would constitute a regulated activity if provided in Hong Kong under section of the SFO. Furthermore, the SFC made it clear that it has received complaints from investors who experienced difficulties in withdrawing fiat currencies or virtual assets from their accounts opened with unregulated platforms. Investors are further reminded that if such platforms do not have a nexus with Hong Kong, the SFC may not have jurisdiction over them. In case of dispute, seeking recourse is likely to be difficult. If you are experiencing difficulties with your dealings with cryptocurrencies on crypto-exchanges, and would like to seek legal recourses, please contact us for a discussion today. When you visit our website, it may store information through your browser from specific services, usually in the form of cookies. Here you can change your Privacy preferences.

Making an Initial Coin Offering in Hong Kong

Developing a unique culture, which blends traditional client care with modern technology and working practices since The licence will permit OSL to operate a brokerage and automated trading service for virtual assets, including security tokens. Final approval by the SFC is subject to fulfilment of certain conditions.

Hong Kong SFC announces measures to curb crypto-related frauds

RELATED VIDEO: Henry Yu - SFC regulations and Bitcoin (Hong Kong crypto exchanges)

It has received a number of ETF applications from local institutions. And they plan to launch crypto ETFs targeting private banking clients and professional investors. Earlier, the Hong Kong government introduced the virtual currency regulatory framework and licensing system. However, many Hong Kong retail investors have not been able to get crypto trading services from exchanges.

Hong Kong’s First Licensed Cryptocurrency Exchange.

A virtual asset is a digital representation of value, which is also known as "cryptocurrency", "crypto-asset" or "digital token". Nonetheless, given the significant risks virtual assets may pose to investors, the SFC recently have decided to formulate new measures which aim to protect those who invest in virtual assets portfolios or funds, by way of imposing licensing conditions on intermediaries which manage or intend to manage funds investing in virtual assets irrespective of whether the virtual assets meet the definition of "securities" or "futures contracts. Under the existing regulations, where virtual assets fall under the definition of "securities" or "futures contracts", these products and related activities may fall within the SFC's scrutiny. In particular, a Circular to intermediaries on compliance with notification requirements dated 1 June specified the notification requirement under the Securities and Futures Licensing and Registration Information Rules if intermediaries intend to provide trading and asset management services involving such virtual assets. Similarly, the operators of platforms which only provide trading services for virtual assets not falling within the definition of "securities" do not fall within the jurisdiction of the SFC.

Hong Kong regulators call for all cryptocurrency trading platforms to be regulated

Last month, the U. In August, Leung said that Hong Kong should crack down on unlicensed crypto trading. The deal is an advance purchase agreement between Novavax and Israel's Ministry of Health. In its press release on the matter, Novavax wrote that it "will work with the Ministry of Health to obtain the necessary authorizations and finalize plans for distribution in Israel pending regulatory approval.