The crypto regulation in Hong Kong will undergo changes to cover all companies operating with crypto. Thus, platform operators will need to obtain a license with the Securities and Futures Commission (SFC), explained Ashley Alder, CEO of the agency, according to Radio Television Hong Kong (RTHK).
The rule will apply to “platforms that trade any kind of crypto asset, even if it is not classified as security”, Alder explained during Hong Kong Fintech Week. Today, Hong Kong has a crypto regulation that applies only to companies operating with assets that fall under the legal securities definition. So the law opens a loophole.
“When this new regime comes into force, all virtual asset trading platforms in Hong Kong will be regulated, supervised, and monitored under one of two regimes. Either the current rule we adopted last year, or the proposed new license approach”, she noted.
Alder said that companies that wanted to escape regulation chose to trade only assets other than securities. The legislation that came into force in 2019 is opt-in; that is, it is up to the company to decide whether to participate in it. For Alder, this is a “significant limitation” of the previous rule.
For OSL, Hong Kong proves to be a pioneer in crypto regulation
At the time of the first regulation’s launch, Alder explained that the issue was a priority because “this type of platform spread in Hong Kong”. Also, she assessed that these companies were mainly out of the rules because cryptoassets were escaping the definitions of securities and futures contracts.
Under the 2019 crypto regulation, Hong Kong has already given a preliminary endorsement to its first cryptocurrency exchange in August 2020. But OSL Digital still needs to meet some requirements before getting the final green light.
In a statement, OSL commented on the new rules. For the company, it is a “historic development for the sector, paving the way for the growth of institutionally focused companies, such as OSL”. “Once again, Hong Kong has proven to be a world leader and pioneer in digital asset regulation”, the text says