The Securities and Futures Commission (SFC) in Hong Kong is now soliciting comments and suggestions from market participants and interested parties regarding its proposed regulatory framework for virtual asset trading platforms. The decision was made in reaction to the rapidly expanding market for virtual assets, which necessitated increased levels of investor protection.
Over the course of the past few years, there has been a significant rise in interest in virtual assets. Some examples of these assets are cryptocurrencies like Bitcoin and Ethereum. However, they are highly unregulated, which has led to concerns about the possibility that they could be used in criminal activities such as financing terrorist organizations or money laundering.
The Securities and Futures Commission (SFC) has developed a framework to provide trading platforms for virtual assets with a transparent set of guidelines to follow. Trading platforms would be required to seek a license from the SFC under the new laws if they are to comply with certain basic criteria of investor protection and operational resilience. This would ensure that the platforms satisfy the requirements of the legislation.
According to the consultation paper released by the Securities and Futures Commission of Hong Kong (SFC), the proposed regulatory framework would cover all virtual assets that are exchanged on trading platforms, regardless of whether or not these assets are considered securities. Additionally, the Securities and Futures Commission of Hong Kong (SFC) has recommended a number of regulations that trading platforms would be required to comply with. These requirements include maintaining appropriate risk management systems, separating client funds, and having adequate capital.
The Securities and Futures Commission (SFC) has highlighted that the proposed regulatory framework is not meant to hinder innovation in the market for virtual assets; rather, its primary goal is to support the creation of a market that is both sustainable and responsible. The Chief Executive Officer of the SFC, Ashley Alder, made the statement that “our regulatory approach is not static.” “It will evolve in order to keep pace with the changing landscape of the virtual asset market, and it will take into account the perspectives of stakeholders as well as the most recent developments in regulatory policy”.
The time allotted for public consultation will run out on 31st March 2023. The Securities and Futures Commission (SFC) is urging all interested parties to offer their feedback on the proposed regulatory framework through their link here. This input will be used to help shape the final version of the regulations.
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