Traditional Chinese junkboat sailing across Victoria harbour, Hong Kong. Source: iStock/Onfokus
Hong Kong regulators and senior members of the government have spoken about their willingness of introducing new rules to police the crypto sector, with a new set of guidelines already formulated for crypto brokerages.
According to RTHK, Hong Kong’s Secretary for Financial Services and the Treasury Christopher Hui Ching-yu noted that the government now needed to make a “response to market changes” as the popularity of tokens such as bitcoin (BTC) continues to grow.
Hui was speaking at a summit with financial chiefs and regulators, where he stated that the government was planning to propose an amendment to the Hong Kong Anti-Money Laundering (AML) Act pertaining to a licensing system and regulation of crypto exchanges “this year.” He praised Hong Kong’s record in AML-related activities, but stated that there was “still work to be done” if the province were to “maintain its status as an international financial center.”
Hui added that the popularity of “virtual assets” was driving the need to amend legislation to “add provisions to prohibit unlicensed exchanges from promoting their services.
The Secretary stated that similar moves had already been made in Germany and Switzerland. But he also hinted that Hong Kong may seek to allow retail investors greater access to the crypto markets.
Also in attendance was Julia Leung, the Securities and Futures Commission (SFC)’s Deputy Chief Executive Officer and Executive Director (Intermediary Department), who remarked that the existing rules surrounding crypto brokers, financial institutions, and other intermediaries needed to be tightened – adding that trading platforms needed to ensure that their own funds and those of their customers needed to be kept separate.
She was quoted as saying that the separation of funds would ensure that customer-owned assets could be protected even if a trading platform were to suffer bankruptcy.
Leung claimed that as “some investors” prefer to buy coins through “intermediaries such as banks, securities, and brokerages,” the commission, along with the Hong Kong Monetary Authority (Hong Kong’s central bank and top financial regulator) have issued a “joint circular.”
The circular, the report noted, sets out a range of rules that crypto-related intermediaries would be obliged to adhere to, including the fact that they should only provide their services to professional investors. The circular also explained that brokerages must make full risk disclosures and provide customers with transparency tools to help “protect investors.”
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