Hong Kong Regulatory Body Considers Tightening Crypto Laws

One of the strongest cryptocurrency market in Asia - Hong Kong is considering to tighten cryptocurrency laws for businesses and individuals alike. The country’s topmost regulator - Securities and Futures Commission (SFC) has announced putting trader, exchanges and other crypto-based companies under its regulatory oversight.

Last year after the blanket ban on crypto trading and other businesses in China, several people and businesses considered moving to its neighboring country Hong Kong. With crypto-friendly approach, Hong Kong saw a massive surge in crypto trading activities. However, along with it also came the concerns associated with crypto crime like money laundering, fraud, terror-financing and others.

As global regulators are strengthening their grip on the crypto market to protect investors, the SFC also considers revaluation the country’s cryptocurrency laws with a major focus on the ICO-market. As a result, the SFC has issued new guidelines for the crypto market as well as investments funds holding digital assets.

The new SFC guidelines note that investments funds will need to obtain a license if their portfolio’s exposure to digital assets is more than 10%. Furthermore, under the new license, the funds can sell crypto products only to professional investors, reports Nikkei Asian Review.

Also, the SFC has set forth a voluntary scheme wherein exchanges and other crypto-related businesses and funds can test their digital assets under Hong Kong’s “temporary regulatory sandbox”. They can later-n take the decision if they are willing to get the license.

The SFC also mandates the issuance of ICO tokens only as per its new requirements. Since the last few months, the SFC has been giving warnings over the introduction of stricter measures.

Earlier this year in February, the SFC received multiple complaints from investors who were unable to withdraw their funds from the exchanges. Moreover, some exchange were also accused of asset misappropriation and market manipulation.

Hong Kong regulatory action comes just at a time when global regulators on working on similar grounds. The crypto market since long is plagued with notorious activities of manipulation. However, the stricter regulations come with its own pros and cons. While some consider it as a necessary measure to safeguard investors, other see it as a costly experiment discouraging FinTech innovation and growth.

Daisuke Yasaku from the Daiwa Institute of Research says that introducing stricter regulations could prove detrimental for Hong Kong saying that the “cost of regulations could be high”.

Similarly, Timothy Loh, who manages a law firm in Hong Kong says “The requirements of the SFC initiative may prove too burdensome for some operators”.