Hong Kong is searching for new ways to improve cryptocurrency trading activities in the country. Hong Kong’s financial watchdog wants to protect investors by regulating cryptocurrency trading platforms. This is something very similar to what Japan has been doing in the last months.
Hong Kong’s Financial Watchdog to Regulate Crypto Trading
According to Carlson Tong Ka-shing, the outgoing chairman of the Securities and Futures Commission (SFC), the agency has certain limits. He explained that the SFC can only rule about securities.
During a conversation with the South China Morning Post, he said that a ban on crypto trading would not be effective. Transactions can be performed at all times via platforms in overseas markets. It is important to remember that mainland China has imposed a strict ban on virtual currencies.
However, the SFC wants to regulate the market and control the activities. Furthermore, the agency has only warned investors about investing in cryptos. But there is also an increased number of users and merchants working with virtual currencies. That means that the regulator faces increased pressure to impose formal rules in the market.
On the matter, he commented:
“We have to carefully consider the regulatory approach for these platforms because they are new technology and may not qualify as securities. They do not fit in the custodian, audit or valuation requirements, for instance, normally expected under the Securities and Futures Ordinance.”
Additionally, he said that there is no other international market with a comprehensive regulatory framework for crypto trading platforms. They are analysing how to create one that will ensure investors’ interests.
And indeed, cryptocurrency exchanges have been welcoming to this specific move. Angelina Kwan, the chief operating officer of BitMEX, said that they would work closely with the SFC on regulations. BitMEX is one of the world’s biggest cryptocurrency trading platforms.
“The US has introduced regulations over cryptocurrency and there are futures products being traded by the CME Group and the CBOT,” she commented. “This shows that a regulatory authority can help to develop a new industry.”
Jeremy Allaire, founder and chief executive of Circle, said that they know that their OTC trading desk in Hong Kong operates without clear regulations. He said that they will pay close attention to the new regulatory frameworks that could emerge.
There are some countries such as Malta or Switzerland that have been very welcoming towards crypto and blockchain companies. These nations have developed flexible legal frameworks for firms to grow while protecting investors.
Japan has also been imposing several regulations to cryptocurrency trading platforms. Since the beginning of the year, several companies in the Japanese market experienced different issues. For example, the crypto exchange Coincheck was hacked for $500 million dollars.
Now, crypto companies and exchanges in Japan must follow strict rules to operate.
*This post is credited to Use The Bitcoin