• Hong Kong’s regulator is stepping up its oversight of virtual assets

  • According to a Hong Kong Securities and Futures Commission official, the regulator wants to increase oversight of virtual assets because scams involving them have emerged in the market.

    • SFC’s deputy chief executive officer, Julia Leung, stated Tuesday during a webinar hosted by the Asia Securities Industry and Financial Markets Association that the regulator will most likely expand relevant licensing regulations to supervise virtual assets.
    • According to Leung, a crackdown on unlicensed cryptocurrency trading is required, as are efforts to improve investor education.
    • Hong Kong has proposed legislation that would require virtual asset service platforms (VASPs) to obtain operating licenses. Following a 2019 volunteer program that allowed exchanges to opt in and commit to compliance, Hong Kong’s Financial Services and Treasury Bureau published its Consultation Conclusions in May, with legislative proposals to introduce a licensing regime for VASPs.
    • Once the new licensing regime takes effect, licensed VASPs will be subject to relevant anti-money laundering requirements, and the SFC will have greater authority to supervise such entities.
    • Angelina Kwan, senior advisor to the board of HashKey Group and a former SFC regulator, told us that more rules and clarity will make the market better, and that investor education is essential. “If you don’t understand it, if it doesn’t sound right, if it sounds too good to be true, it’s usually a scam,” she says.
    • Lennix Lai, director of financial markets at cryptocurrency exchange OKEx, told us that the OKEx team took part in the consultation, providing the government with their thoughts on the crypto space, and that regulatory proposals and changes are common in the crypto world.
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