As cases of crypto-crime and money laundering increase across Southeast Asia and Hong Kong, the world’s leading financial epicenters, Securities and Exchanges Commission(SFC) is geared to re-evaluate regulations regarding the Initial Coin Offerings (ICOs).
According to the SFC, if an investment fund has 10% or more of digital assets they will now need to obtain a license. Even then the companies will only be able to sell their products to professional investors.
Under the voluntary scheme, exchanges will be able to test virtual currency products or services temporarily in a “regulatory sandbox” before deciding on whether to seek a license.
Daisuke Yasaku of the Daiwa Institute of Research said:
“As a financial center closely linked to mainland China, Hong Kong is taking steps in the right direction with measures like requiring identity verification for transactions”
He also warned:
“But the cost of regulations will be high. Depending on the design of its platforms, an exchange can be required to report frequently to the authority and subject to rigorous inspections and monitoring”
Below is the action timeline of events:
In February, the SFC sent warning letters to seven local exchanges after receiving complaints from investors claiming they had been unable to withdraw fiat or cryptocurrencies from their accounts. Certain exchanges were accused of misappropriating assets or manipulating the market.
In March, the commission ordered Black Cell Technology to halt its ICO and charged the company with conducting unauthorized promotional activities.
There are many pros and cons in tighter regulatory measures on the Hong Kong crypto industry. Although many consider it essential to safeguard investors and keep a lid on the industry, others believe that the new cryptocurrency laws could be costly and work against crypto firms in Hong Kong.
However, this initiative will boost investor protection and hence attract more mainlanders to trade cryptocurrency assets in Hong Kong. As proper regulation is very important for attracting the big players, it helps Hong Kong to be among the top cryptocurrency trading centers worldwide.
Link to the original news article can be found here.