Sfc sandbox crypto

As a result, the demand for local crypto exchanges which allow people to trade crypto assets with Hong Kong dollars via bank transfer is also increasing 2. Among other initiatives, the SFC observed that some virtual asset trading platform operators have found ways to operate so that they fall outside the regulatory remits of the SFC and other Hong Kong regulators. On 6 November , the SFC issued a position paper, setting out its new regulatory regime for the virtual asset trading platforms operating in Hong Kong, following its conceptual framework announced in It is intended to be a regulatory overview only and does not constitute any form of investment advice. Under this regulatory framework, these operators fall within the jurisdiction of the SFC and can apply for a licence for conducting Type 1 dealing in securities and Type 7 providing automated trading services regulated activities. Subject to meeting other licensing requirements including the fit and proper criteria, the SFC may then grant a licence to a qualified platform operator to carry on its virtual asset trading business.

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The Legal 500: Blockchain Country Comparative Guide 2020 - Hong Kong chapter

Hong Kong's financial regulator will publish a regulatory framework for cryptocurrency exchanges later on Wednesday, Chief Executive Ashley Alder announced at a fintech conference in the city.

The rules will cover custody, know-your-customer rules and the storage of crypto assets, among other issues. Alder, head of the city's Securities and Futures Commission SFC , first announced initiatives on digital currencies at Hong Kong's Fintech Week a year ago, including a "sandbox" for crypto exchanges, as a way for the regulator and exchanges to discuss ways to oversee digital currencies. The regulator is taking that work forward, Alder told the conference on Wednesday. Market watchdogs around the world are debating how to, and whether they should, regulate the cryptocurrency industry.

So far, they have mostly focused on protecting investors from scams based on digital assets. Hubbard becomes first trans woman at Olympics. How gymnastics evolved from 'exercising naked'. Is re-vaccination required for Covid? World champ Hassan falls, gets up and wins 1, heat. Hong Kong watchdog to set new crypto exchange rules. Reuters, Nov 06 , ist updated: Nov 06 , ist. Hong Kong. Related stories. HK protester given 9-year term in first security case China's crackdown on its biggest companies.

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Hong Kong sets measures to regulate virtual assets

Last time we described how Professor Johnstone argues in his paper that the regulation of cryptoexchanges should be model-neutral and form-independent. Regulation, he says, should not be prematurely imposed in a manner that may inhibit the ability of private market regulation to develop effective outcomes that align with public policy concerns. In his paper, Professor Johnstone notes that the efforts of some jurisdictions to actively regulate crypto exchanges have not been successful in leading to more granular regulation that achieves the twin aims of industry development and consumer protection. In November , the SFC announced that crypto exchanges can apply to enter a regulatory sandbox. The sandbox approach amounts to an industry-regulator information sharing exercise that recognizes the difficulties encountered when applying regulations developed in a pre blockchain-era to digital asset trading.

Meanwhile, under this new framework, the SFC will explore whether virtual asset trading platforms are suitable for regulation in the SFC Regulatory Sandbox.

Hong Kong licenses crypto exchanges

The Colombian government announced on Thursday 17 the creation of a regulatory testing model that will include cryptocurrency platforms in the country's financial system. The measure, however, does not yet mean that there is a regulatory framework for companies operating in this sector since it has a defined operating time. The main objective, according to the entity, is to analyze "the effectiveness of recent technological developments in verifying digital identity and traceability in transactions". The SFC made it clear that the measure will have no impact on the regulatory framework for the cryptocurrency sector, nor will it change the rules on "responsibilities for information and risk management of this type of transactions". The Colombian measure at first glance may look like the sandbox made by the Brazilian Securities and Exchange Commission CVM in Brazil, but there are many differences between them. For Bruno Ramos Sousa, partner and legal director at Hashdex, the big difference can be seen in the regulatory field. In Sousa's view, however, the Colombian pilot project goes further and opens the possibility of integrating banks and cryptocurrency brokers in the same market. At the time, SEBA was looking for a license from the Swiss financial market supervisor to have a bank in order to precisely offer cryptocurrency services and extend traditional banking services to companies in this sector. Save my name, email, and website in this browser for the next time I comment.

Colombia Invites Firms to Participate in Crypto Transaction Trial Using its Regulatory Sandbox

sfc sandbox crypto

The Securities and Futures Commission SFC has put the crypto industry on notice that it is concerned that cryptocurrency trading platform operators and fund managers investing in virtual assets could pose investor protection risks. The SFC are well aware that clients of a cryptocurrency trading platform or fund managers that invest in virtual assets run the same risks that are associated with traditional financial assets. Risks of money laundering, safe custody of assets, conflicts of interest and fraud still apply. Clients trading or fund investing in virtual assets that are not classified as securities have not been afforded the protections legislated under the Securities and Futures Ordinance SFO. Safe custody of assets, fair markets, fitness and the financial soundness of trading platform operators are just some of the areas that could pose risk for clients in the absence of regulatory supervision.

Hong Kong regulates digital assets and cryptocurrencies less strictly than the Chinese Mainland where is strictly prohibited, but more strictly than Japan, the United States and Singapore.

Colombian government invites crypto firms to participate in its new regulatory sandbox.

Colombia is one of the few countries, with a high volume of trade, that still does not regulate bitcoin. However, the project will not be enough for, starting from it, the step towards a regulation of the cryptoactive sector takes place, as indicated by the president of Colombia Fintech Erick Rincon. A supervisory sandbox is not the same as a regulatory one and, in the case of Colombia, the one we have is one of the first. It is only a space for inspection of the processes of cash in to convert money into cryptocurrencies or cash out convert cryptocurrencies into fiat , by those who interact with exchanges in front of financial institutions. From their perspective, the sandbox is a good step taken by the Colombian government when he acknowledged that there was too much friction between financial institutions and cryptocurrency service providers operating in the country. He adds that the pilot project seeks to develop some instructions for its supervised institutions, such as banks, interact with cryptocurrencies and with the platforms that offer services.

Regulatory Sandboxes

Importantly, the watchdog shifts retail interest away from investing in the volatile asset class to accredited individuals. As part of the new rules, both virtual currency exchanges and fund fall under the purview of the Hong Kong government, after years of running as an unregistered investment house, but as legal businesses otherwise. This will help Hong Kong to be among the top cryptocurrency trading centres worldwide because proper regulation is very important for attracting the big players. Furthermore, any fund investing devoting more than 10 percent of their total assets under management to cryptocurrencies must be registered with the government. Authorities believe cryptocurrency prices rose last year after immense speculation from both institutional and retail investors. However, the former followed a fundamental strategy for investing, such as expecting more extensive use in payments and long-term benefits, while the latter placed bets for short-term gains.

licences to VA trading platform operators under the SFC's regulatory sandbox initiative, which is great news for the crypto industry.

Erick Rincón: Colombia’s sandbox will not be enough to regulate bitcoin

The Securities and Futures Commission SFC issued a statement setting out a new approach which aims to bring virtual asset portfolio managers and distributors of virtual asset funds under its regulatory net. It also sets out a conceptual framework for the potential regulation of virtual asset trading platforms. In light of the significant risks virtual assets pose to investors, the SFC will adopt new measures within its regulatory remit to protect those who invest in virtual asset portfolios or funds.

The Securities and Futures Commission SFC has established the Fintech Contact Point to enhance communication with businesses involved in the development and application of financial technology Fintech which intend to conduct regulated activities in Hong Kong. The purpose of the Fintech Contact Point is to facilitate the Fintech community's understanding of the current regulatory regime, and to enable the SFC to stay abreast of the development of Fintech in Hong Kong. You may contact us if you intend to engage in regulated activities involving Fintech, for example virtual assets trading and robo-advisory services. We also welcome discussion with firms which intend to provide their services utilising financial technologies, for instance, facial recognition, artificial intelligence or blockchain.

The new regulatory framework will be available to VA trading platforms that operate in Hong Kong and offer trading of at least one security token. The framework involves the granting of a licence for Type 1 dealing in securities and Type 7 providing automated trading services regulated activities.

On 01 November , the SFC issued a policy statement which introduces, among others, a conceptual framework for licensing and regulating virtual asset trading platforms through a regulatory sandbox. The policy statement provides clarity on the regulatory standards for operating a cryptocurrency exchange under the supervision of the SFC. On 01 November , the Securities and Futures Commission SFC issued a policy statement Statement which introduces, among others, a conceptual framework for licensing and regulating virtual asset trading platforms Platforms through a regulatory sandbox Sandbox. The Statement provides clarity on the regulatory standards for operating a cryptocurrency exchange under the supervision of the SFC. To run a cryptocurrency exchange which offers trading of these virtual assets, a Platform Operator would either need to 1 be licensed to conduct Type 1 dealing in securities and Type 7 providing automated trading services regulated activities Part 5 Licensing ; or 2 be authorised under Part III of the SFO Part 3 Authorisation to provide automated trading services ATS as a starting point. On entry into the Sandbox, further terms and conditions may be imposed, or terms and conditions that may be typically imposed on a provider of ATS varied or relaxed, as the SFC deems appropriate.

Updated: version history. Historically, Hong Kong has a reputation as a reliable and predictable non-interventionist regulator. Most rules are clearly laid out and easy to comprehend and follow for people with little legal training like me. Rules rarely contradict each other and while government agencies do not closely coordinate with each other or share common goals, there are few power plays and power grabs between different agencies and departments.

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