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The Chief Executive of Hong Kong’s Securities and Futures Commission, Ashley Alder, announced at a fintech conference in Hong Kong that the region’s financial regulator is going to develop a framework for digital asset exchanges. The framework was to be released on Wednesday.
Hong Kong is the hub for many of the largest cryptocurrency ventures, with several of the largest crypto exchanges operating in the region. Alder says that until now these exchanges had not been subjected to thorough regulation because previously virtual assets were not categorized under the definition of a security.
With the new devised strategy, there are standards set in place which Hong Kong’s Securities and Future Commission (SFC) expects typical securities brokers to meet.
The SFC aims that the brokers should have all information at hand for the crypto exchanges, including custody details, understanding of know-your-costumer requirements, anti-money laundering and various market manipulation security tactics, apart from the issues that become specific to the industry of cryptocurrency.
Alder made the announcement of regulatory initiatives on cryptocurrencies last year at the 2018 Fintech Week held at Hong Kong. It included a “sandbox” for crypto exchanges so regulators and exchanges can discuss various methods of overseeing digital currencies.
Alder claim that they have engaged with a large number of crypto platforms and operators to examine if some of them could hold operations in a regulated environment. After an in-depth observation of the different technical and operational features, Alder concluded that regulations can be placed. The exchanges can now apply for regulatory authorization from Wednesday onwards.
Proper Regulation Might Increase Crypto Adoption
The Chief Executive of the digital asset trading company BC Group, Hugh Madden, emailed a statement that Ashley Alder’s decision to announce a regulatory framework is an important moment for financial services in the continent as this could increase the acceptance of digital assets as means of financial exchanges.
Alder further states that the regulators will use an “opt in” approach since regulations will not be applied for exchanges unless they trade assets that are defined as securities, which does not include Bitcoin(BTC)trade, essentially reaffirming that the second statement will be issued on Wednesday.
With the rise of crypto across the globe, many market watchdogs are engaged in debate about the regulations of cryptocurrency and how should the industry be regulated across international platforms. Aside from the focus of protecting investors from digital asset scams, there are also issues such as Libra, Facebook’s forthcoming cryptocurrency, causing a global debate about the risks it entails.