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The rules, which build off a conceptual framework the SFC first put forth last November, is designed to offer comprehensive protections for investors, Alder said:. And it also zeros in on many of the new concepts we are getting used to, such as hot and cold wallets, forks, airdrops and the like.
Accordingly, the development paves the way for cryptocurrency exchanges to have an inroad to the mainstream in Hong Kong, albeit with firm compliance requirements that must be met in their entirety to gain an SFC greenlight.
On the same day it released its new regulatory framework for cryptocurrency exchanges, the SFC also published a public bulletin warning locals against participating in unregulated cryptocurrency futures offerings in Hong Kong. Last November, the SFC set out rules for local fund managers that wanted to invest directly into cryptocurrencies.
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The new rules are a bid to monitor and exercise greater control over these non-fiat trading platforms transactions. Besides, totally banning them would be an immature act. If cryptocurrencies are banned in Hong Kong, says the financial official, it would be a loss to the exchequer and traders would simply transact from overseas market platforms. Hence, the approach is critical to keeping the business of cryptocurrencies in Hong Hong kong cryptocurrency exchange regulation. Considering the explosive use of this type of alternate payment, smart contract methods being adopted in most economies across the world, cryptocurrencies are marking the transition to digitized commerce.
Major Changes Expected
It should be pointed out from the outset that at this moment state authorities have significantly neutral position in relation to obtaining license for exchange of cryptocurrency in Hong Kong. It means that the issue of cryptocurrency exchange licensing is in suspension. However, such position of the regulator may be transferred from amorphous to very specific form. Consequently, the activity related to the exchange of cryptocurrencies is not subject to the Law of Hong Kong appliable to securities. Subsequently, obtaining license for exchange of cryptocurrencies in Hong Kong is not required. These circumstances remains a wide area for business operations with cryptocurrency exchanges in this state. Nevertheless, if the cryptocurrency exchanges intend to exchange virtual currencies to fiat funds, such activity may be subject to regulation of Hong Kong authorities. In Hong Kong, there are two main organizational and legal forms, namely: company limited by shares and company limited by guarantee.
PCN TODAY: Hong Kong May Soon Regulate Cryptocurrency Exchanges!
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As there is no new primary legislation to directly regulate cryptocurrencies in Hong Kong, there is a certain degree of uncertainty on the legal definition within the statutory law. Trading activities are controlled by the Customs and Excise Departmentincluding commodities trading. As of the date of this publication, it is yet to be seen how the SFC will finalise its licensing regime for cryptocurrency exchanges, as the SFC Sandbox is currently being conducted in closed-door discussions with the SFC and there are already comments from the industry on how the proposed licensing direction would impose an uncommercial burden on the business. Read more about Businesses that principally koong with cryptocurrencies such as exchanges and OTC desks are not directly subject to the provisions of AMLO, as such businesses do not fall within the definition of a financial institution or DNFBP unless the cryptocurrency exchaange partially operates in a regulated business, for example, providing money services such as money changing and remittance services. The regulator also issued a warning Wednesday to providers of cryptocurrency-based futures products targeting Hong Kong citizens without the proper paperwork. It is not yet clear how many cryptocurrency exchanges cryptoxurrency apply for a license or meet its standards. However, some license regimes are restrictive and tied to control over real estate, which makes them only accessible to an oligopolistic cartel of property developers. Leave a reply Cancel reply Your email address will not be published. Businesses that intend to operate large-scale data centres should be aware of the relevant land-use rights stipulated under the laws of Hong Kong. Some have praised the move by the SFC as a recognition that the cryptocurrency space as limited, but others have criticized it.