SFC Head of Fintech Unit Elizabeth Wong (left) and SFC Interim Head of Intermediaries Keith Choy (right) pose for a photo after breifing reporters about the Guidelines for Virtual Asset Trading Platform Operators on May 23, 2023. (OSWALD CHAN / CHINA DAILY)
Providing virtual asset trading services without a license in Hong Kong will be a criminal offense starting June 1, when the Guidelines for Virtual Asset Trading Platform Operators take effect.
The guidelines set out, among other things, rules on the safe custody of assets, segregation of client assets, avoidance of conflicts of interest, and cybersecurity standards and requirements that are expected of a licensed trading platform.
“Providing clear regulatory expectations is the key to fostering responsible development,” Securities and Futures Commission CEO Julia Leung Fung-yee said in a statement Tuesday.
Elizabeth Wong, the head of the SFC’s fintech unit, said at a Tuesday media briefing that they expected retail trading to be provided by SFC-licensed platforms in the second half of this year
“Hong Kong’s comprehensive virtual-assets regulatory framework follows the principle of ‘same business, same risks, same rules’, and aims to provide robust investor protection and manage key risks. This will enable the industry to develop sustainably and support innovation,” Leung added.
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Elizabeth Wong, the head of the SFC’s fintech unit, said at a Tuesday media briefing that they expected retail trading to be provided by SFC-licensed platforms in the second half of this year.
“As it takes time to approve applications, platforms are advised to ask professionals to pre-check whether the application is compliant before submitting it to the SFC in order to shorten the approval process. Currently, we do not know how many virtual-asset trading platforms have applied for licenses,” Wong added.
Keith Choy, the SFC’s interim head of intermediaries, said that if a local virtual asset platform has not been in operation before the new regulations or, if an overseas platform still does not have a license after the implementation of the guidelines, it cannot promote or conduct a virtual asset trading business in Hong Kong.
“Otherwise, it will bear criminal responsibility,” Choy said. “Platforms that are currently operating can apply for a license within nine months after the guidelines come into effect.”
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The SFC will provide additional guidance on the new regulatory requirements and other implementation details, including license application procedures as well as more information about transitional arrangements.
According to the SFC statement, the commission has yet to approve any virtual asset trading platform to provide services to retail investors even as the new regulatory framework is set to take effect on June 1, and most of the platforms currently accessible by the public are not regulated by the SFC.
The commission also released the results of its consultations on the proposed regulatory requirements. The SFC said it received 152 written submissions from various stakeholders and the consensus is to allow licensed trading platform operators to serve retail investors. The consultation paper was released in February.