The current proposal over virtual assets trading platforms complies with the existing regime under the Securities and Futures Ordinance in Hong Kong

Beginning June 1, 2023, all centralized virtual assets trading platforms operating in Hong Kong must have a license from the Hong Kong Securities and Futures Commission (SFC). In accordance with this, the commission has initiated a consultation permitting operators within the sector to contribute toward the final regulatory framework.

As published on its website, the Hong Kong Securities and Futures Commission has asked interested contributors to put forward their views before March 31, 2023. The Hong Kong Securities and Futures Commission requested all participants in the exercise to put forward the names of the firms that they represent making submissions. It asked participants who wish to stay anonymous to specify, as the commission may publish the details of the contributions on its website at a later date.

This proposal over virtual assets trading platforms is in accordance with the current regime under the Securities and Futures Ordinance in Hong Kong. It compares with the same license issued to securities brokers and automated trading venues but with nominal adjustments.

The Hong Kong Securities and Futures Commission plans to expand the proposed regulation so that licensed platforms can serve retail investors. It will combine the new laws with current measures that protect investors, including client onboarding and token admission.

Hong Kong Securities and Futures Commission’s CEO, Julia Leung, noted that the commission’s proposed regulation is in accordance with the worldwide consensus among regulators, in line with the latest turmoil and the collapse of some top crypto trading platforms. As per Leung, the aim of the regulation is ‘to ensure investors’ protection and key risks effectively managed.

The new regulation will cover new as well as current virtual assets trading platforms. The Hong Kong Securities and Futures Commission advised the trading platforms, particularly the pre-existing ones, to revise their systems and controls in preparation for the new regime. The Hong SFC also asked any operator reluctant to comply with the suggested change to prepare for an orderly shutdown of its business in Hong Kong.