The Hong Kong Securities and Exchanges Commission (SFC) announced its plans to introduce a new set of blockchain and cryptocurrency regulations. Local investment funds which store 10% or more of their capital in digital assets will now need to obtain a specialized license. However, even licensed funds will be allowed to trade with institutional investors only.
The SFC is going to strengthen the control over cryptocurrency circulation due to high risks of crime and money laundering associated with crypto.
Unlike the mainland China, Hong Kong has been sticking to one of the less stringent regulatory frameworks in Asia in the field of crypto. The city authorities have recently decided to revise their stance on the cryptocurrency industry, especially regarding ICOs.
The new regulation will cover investments in crypto. According to the new rules, a fund holding 10% (or more) of its capital in crypto assets will now have to get a license, but even licensed funds will be able to deal with institutional investors only.
The regulation also presupposes the opening of a “temporary regulatory sandbox” designed for testing blockchain products for compliance with the local legal framework.
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.
Though cryptocurrencies were never considered a legal tender in Hong Kong, the status of an autonomous territory within China allowed the city to stand aside from the China’s general crack down on cryptocurrencies. The situation is apparently changing now.