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Ever since their rise to fame in 2017, cryptocurrencies have also had to face criticism for the lack of security available on the platforms for their investors and stakeholders. Cryptocurrencies in specific and crypto assets in general, have always seemed elusive for government agencies to provide any form of oversight. However, as the world comes to grips with the fact that cryptocurrencies and other blockchain-powered technologies are here to stay, governments and institutions across the world are finally introducing laws and regulations to oversee their proceedings.
One such step in that direction is the news reported by the Asian Review that Hong Kong is set to tighten regulations on cryptocurrencies. Plans have been put in place by the authorities to put exchanges, traders and other related companies under the oversight of SFC or Securities and Futures Commission.
This step from the Hong Kong authorities comes after a rise in concerns regarding the role cryptocurrencies are playing in money laundering and public defrauding. Hong Kong had become a thriving market for ICOs as opposed to the rest of mainland China where nearly all forms of cryptocurrencies and activities related to them had been banned.
Some of these guidelines that the SFC has put forth include a requirement to obtain a license by investment funds if the amount of cryptocurrencies in the assets they manage is higher than 10%. Moreover, companies will only be allowed to sell products related to cryptocurrencies to professional investors. This rule, in particular, helps shield inexperienced and one-time investors from losing their savings on the empty promises of long-term profits. The regulations by the SFC will also include requirements to fulfill for companies to be able to hold ICOs.
“The requirements of the SFC initiative may prove too burdensome for some operators,” said Timothy Loh, manager of a law firm in the territory. Daisuke Yasaku from the Daiwa Institute of Research noted that overall, “Hong Kong is taking steps in the right direction with measures like requiring identity verification for transactions.” However, he warns that the regulations’ cost will be high.
These regulations by Hong Kong reflect an international trend. Major financial oversight bodies across the world have suggested regulations for cryptocurrencies to curb the money laundering and fraud carried out with the help of these assets.