Hong Kong Tightens Crypto Guidelines: SFC Could Take Cost Of OTC Buying and selling—Right here’s Why
Hong Kong is contemplating adjustments to its cryptocurrency regulatory framework, notably regarding over-the-counter (OTC) digital asset buying and selling companies.
The Securities and Futures Fee (SFC) might play a bigger position in overseeing the sector, working alongside the Customs and Excise Division (C&ED), based on a latest report from the South China Morning Submit.
Hong Crypto OTC To Be Regulated
Notably, the proposed adjustments would shift from the present system, the place the C&ED primarily handles OTC companies. For context, OTC companies facilitate direct, personal cryptocurrency transactions between massive events, bypassing the necessity for a public trade.
South China Morning Submit reported that the SFC’s potential involvement in regulating OTC companies would align it with its broader duties over the monetary markets, probably offering extra readability for the crypto business.
Citing unnamed sources conversant in the discussions, the report additional disclosed that the SFC has consulted with business gamers on this new licensing regime.
The SFC and the C&ED collaboration can be a key a part of these regulatory developments, addressing issues in regards to the separation of duties between the 2 entities.
Along with OTC buying and selling companies, the SFC can be exploring introducing a licensing regime for cryptocurrency custodian companies, a important component of the market’s infrastructure.
Why The Regulation On OTC?
Hong Kong’s strategy to cryptocurrency regulation follows the numerous monetary losses and rising issues over fraud within the sector.
In response to the report, the collapse of JPEX, specifically, has pushed authorities to look nearer on the position of OTC companies, which have change into “primary avenues for channeling retail buyers’ funds” into illicit schemes.
The report highlighted additional that these companies typically function by “physical shops”, lots of which have been tied to fraudulent actions, highlighting the necessity for extra “stringent oversight.”
In response to the rising dangers, an SFC consultant famous:
To foster the sustainable and accountable improvement of the digital property business in Hong Kong, the SFC works carefully with the federal government and different regulators in creating a sturdy, clear and constant regulatory setting in Hong Kong
Nonetheless, regardless of the appreciable justification for regulating the OTC crypto sector within the area, the report talked about that people are nonetheless nervous about how the regulation will work, noting:
Some within the business complained that placing all OTC outlets underneath the C&ED, which regulates cash changers, was inflicting confusion provided that the SFC regulates different areas of crypto funding.
Regardless, the Monetary Providers and the Treasury Bureau (FSTB), which initially sought public suggestions on the OTC laws over a two-month session interval famous that the proposal obtained “general support from respondents.”
Moreover, though the complete outcomes of the session are but to be launched, the FTB disclosed that the bureau is now reviewing the design of the regulatory framework primarily based on the suggestions supplied.
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