Hong Kong To Regulate All Crypto Trading Platforms
Hong Kong has announced that it will regulate all cryptocurrency trading platforms operating in the financial hub.
Last year, Hong Kong’s Securities and Futures Commission (SFC) launched a regulatory framework specifically for cryptocurrency trading platforms. However, the framework was restricted to those platforms that traded an asset officially classed as a security or future, not just tokens like bitcoin.
On Tuesday, SFC chief executive Ashley Alder said that the Hong Kong government will propose a new licensing regime under its anti-money laundering legislation, requiring all cryptocurrency trading platforms that operate there, or target investors in the city, to apply for an SFC license.
Don Guo, CEO of Broctagon, a brokerage technology solutions and liquidity provider, said that the SFC announcement is a positive as crypto has historically lacked regulatory consensus and the regulation will help establish a mainstream-like environment for crypto traders.
“Although this is an immediate knock to the local crypto industry, this as a positive. The cryptocurrency industry has lacked a regulatory consensus and framework to ensure safe trading. While the landscape has typically been fragmented, it is encouraging to see Hong Kong take the steps to establish a mainstream-like environment for participants looking to trade crypto,” Guo said. “That said, the conversation is far from over. Although this news move may protect investors and encourage wider uptake, the UK’s FCA has recently banned the trading of crypto derivatives altogether, and other global governments continue to drag their heels with regards to regulation. Hence, the industry continues to be perceived as a ‘Wild West’ by many.”
Guo added that the trading infrastructure has become far more sophisticated and previous challenges such as illiquidity are being eroded, so it’s time the regulators caught up with the markets.
“Countries like China, Singapore and now Hong Kong continue to lead the way in terms of taking positive steps towards crypto regulation,” he said. “As more investors – particularly institutions – continue entering the space, governments must prioritise setting a clear precedent so participants can invest safely.”