• Hong Kong’s SFC proclaims new rules for digital asset buying and selling platforms.
• Most respondents welcomed the proposed necessities.
• Failure to conform will end in an orderly enterprise closure.

The Securities and Futures Fee (SFC), the impartial statutory physique accountable for regulating Hong Kong’s securities and futures markets, has introduced the conclusion of consultations on proposed regulatory necessities for SFC-licensed digital asset buying and selling platform operators. The SFC obtained 152 written submissions throughout consultations, together with suggestions from trade associations, market contributors and different stakeholders.

In response to the SFC, most respondents welcomed the proposed necessities, with some asking for additional clarification. The SFC has revised and clarified the proposed rules in response to suggestions obtained.

One of many key points of the proposal was to permit licensed buying and selling platform operators to supply companies to retail traders, which obtained sturdy assist from respondents. The SFC will implement suitability checks throughout onboarding, enhanced token due diligence, improved governance, admission standards, and disclosures to guard these traders.

SFC Chief Government Officer Julia Leung careworn the significance of offering clear regulatory expectations to advertise accountable growth. Hong Kong’s complete regulatory framework follows the precept of “identical enterprise, identical dangers, identical guidelines” to make sure strong investor safety, handle key dangers, promote sustainable development and We assist innovation.

Efficient June 1, 2023, the rules for crypto asset buying and selling platform operators define varied necessities corresponding to safe asset custody, segregation of buyer belongings, avoidance of conflicts of curiosity, and cybersecurity requirements. The SFC will present extra steerage on new regulatory necessities, together with license utility procedures and transitional preparations.

The SFC encourages crypto asset buying and selling platform operators keen to adjust to regulatory requirements to use for licenses. Companies that select not to take action are anticipated to proceed with an orderly closure of their operations in Hong Kong, the SFC stated. Moreover, the SFC will work with the Investor and Monetary Schooling Council to coach traders on the dangers of buying and selling on unregulated platforms.