The Securities and Futures Commission (SFC) of Hong Kong has launched a consultation on the proposed requirements for operators of virtual asset trading platforms.
Under a new licensing regime to take effect on June 1 this year, all centralised virtual asset trading platforms carrying on business in Hong Kong or actively marketing to Hong Kong investors will need to be licensed by the SFC.
The SFC’s proposed regulatory requirements for virtual asset trading platforms are based on the regulatory requirements of the existing regime under the Securities and Futures Ordinance and are comparable to those for licensed securities brokers and automated trading venues.
The SFC has also taken the opportunity to propose modifications to some requirements of the existing regime.
As part of the consultation, the SFC is seeking views particularly on whether to allow licensed platform operators to serve retail investors, and if so, the measures to be implemented in addition to the proposed range of robust investor protection measures, which include ensuring suitability in onboarding clients and token admission.
Operators of virtual asset trading platforms which plan to apply for a licence, including pre-existing platforms, should begin to review and revise their systems and controls to prepare for the new regime. Those which do not plan to apply for a licence should start preparing for an orderly closure of their business in Hong Kong.
SFC’s CEO Julia Leung said, “As has been our philosophy since 2018, our proposed requirements for virtual asset trading platforms include robust measures to protect investors, following the ‘same business, same risks, same rules’ principle.
“In light of the recent turmoil and the collapse of some leading crypto trading platforms around the world, there is clear consensus among regulators globally for regulation in the virtual asset space to ensure investors are adequately protected and key risks are effectively managed.”
Last year, the SFC said that some NFTs that constitute investment products will have to be regulated.
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