Financial regulators around the world are still assessing whether and how they should regulate the cryptocurrency industry. Investor protection and money laundering prevention are of particular concern. Other financial centers in Asia, such as Japan and Singapore, have permits that require all cryptocurrency trading platforms to be regulated.
In contrast, while the Hong Kong Securities and Futures Commission launched a specific regulatory framework for cryptocurrency trading platforms last year, it is limited to platforms that trade assets officially classified as security or futures, not just tokens such as bitcoin.
Hong Kong government proposes licensing under its AML law
Ashley Alder, SFC’s chief executive, said in a speech on Tuesday, “this is a significant limitation, because under the current legislative framework if the platform operator is truly determined to operate completely off the regulatory radar, it can do so only by ensuring that traded crypto assets do not fall within the legal definition of securities. As a result, the Hong Kong government plans to propose new licensing today under its anti-money laundry law, which requires all cryptocurrency trading platforms operating there, or targeting investors in the city, to apply for an SFC license, Alder said.
SFC has not issued a full license to any crypto exchange
Dozens of cryptocurrency exchanges operate in Hong Kong, including some of the largest in the world, although many choose not to apply for a license under existing regulations.
SFC has not yet issued a full license to any crypto exchange but has agreed in principle to issue a license to cryptocurrency firm OSL Digital Securities, a unit of the Fidelity-backed BC group 0863.HK, OSL said in August.