Hong Kong’s New Crypto Rules Explained

In an effort to place itself as a crypto hub, Hong Kong kicked off its Digital Asset Buying and selling Platform (VATP) handbook firstly of the month. The Securities and Futures Fee (SFC) has supplied the rules for cryptocurrency firms that want to function within the nation, and can oversee all licensing.

Now an evidence of the rules by Gilbert Ng, lawyer within the Excessive Courtroom of the Hong Kong Particular Administrative Area and Chris Lee, founding father of TKX capital, has been translated and printed immediately by Wu Blockchain.

The thought behind “transitional agreements” is to supply a one-year trial interval for crypto companies that function within the nation. The businesses can then apply for a enterprise license in 2024, in the event that they examine all of the containers.

Based on the translated publication, firms can be allowed to function if the SFC has decided them to have “real operations and real enterprise practices.” The doc famous that this is applicable solely to non-securities buying and selling platforms.

What constitutes real operations and real practices? The SFC has decided a number of components, together with: whether or not the platform relies in Hong Kong, whether it is managed and operated by staff primarily based within the metropolis, if it has an workplace in there, and quite a few different necessities.

Hong Kong’s pointers look to place extra duty on operators, or the people which are working cryptocurrency exchanges. It establishes the presence of “regulated people” akin to administrators, accountable officers and managers.

These people, in response to the newly permitted guidelines and rules, might want to go a “match and correct” check. It will require crypto agency officers to show related expertise in regulated environments, even when that have is in different international locations.

The handbook additionally states that firms “actively advertising and marketing to Hong Kong residents,” come below purview of regulators. There are additionally pointers that set up whether or not an organization requires an SFC license, such because the existence of an in depth advertising and marketing plan aimed on the metropolis’s retail buyers or if buying and selling is allowed in Hong Kong {dollars}.

It seems regulators in Hong Kong are taking such a agency stance on an organization’s duty after this 12 months’s dismal and disappointing performances by some cryptocurrency firms.

And regardless of its shut proximity to the infamous anti-crypto China, Hong Kong is aiming to create the regulatory ambiance that pulls digital asset firms from all around the world.