Thursday, October 5, 2023

HK Develops Virtual Asset Regulations

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The Hong Kong government is aiming to build a virtual asset industry regulation regime. This is according to Christopher Hui Ching-yu, Secretary of Financial Services and Treasury.

Regulatory Measures for Systematic Development

Hui outlined crucial measures in a letter to the virtual asset industry’s forerunners, including a licensing scheme for virtual asset service providers. The regulation of payment-related stablecoins is being considered. In addition, traditional financial institutions will give rules on how to offer consumers virtual asset-related services.

These measures implements by the government and financial regulators. In it is to ensure that the virtual asset industry develops and operates in a methodical manner. He stated that it will address the threats of money laundering. These initiatives also aim to boost market confidence and, as a result, pave the way for long-term growth.

New Requirement Introduced

The Financial Action Task Force (FATF) introduced the new requirement. As a regulatory step, a licensing framework for virtual asset service providers will implement.

As a result, virtual asset exchanges will need to apply to the Securities and Futures Commission for a license (SFC). This is before beginning to provide services to the citizens under the proposed licensing system.

The licensing scheme applies to both securities-type virtual assets and non-securities virtual assets like Bitcoin.

These regulatory efforts, according to Hui, are made to strike a fair balance between virtual asset needs and obligations. Traditional financial institutions also include in areas such as anti-money laundering, counter-terrorist funding, and investor protection.

Due to the technological nature of virtual asset trading, there will be additional measures to mitigate possible risks such as system breakdowns and cyber security.

Hong Kong’s Regulations on Stablecoins

According to Hui, attempts to establish a regulatory framework for stablecoins are still in the works.

They’re also thinking about introducing a new regulatory framework for stablecoins. This is due to the fact that the nature of this form of virtual asset makes it more inclined to use for payment. As a result, it might bring hazards that aren’t present in other virtual assets. Risks include whether or not there is a reliable system in place to support its value. It might also be the influence on real-world economic activity if its payment function disrupts.

Financial regulators have also released recommendations and regulatory advice on virtual asset-related issues, according to the blog.

In January 2022, the SFC and the Hong Kong Monetary Authority released a circular. Traditional financial intermediaries and banks must follow regulatory requirements when marketing virtual asset-related products, according to the organization. It also includes delivering virtual asset dealing services and virtual asset advice services to customers.

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Ruby Vester
Ruby Vesterhttps://www.cryptoconstellation.com/
Ruby Vester started writing for Cryptoconstellation in 2017. After a successful career as a content writer for a business blog, she found an interest in the crypto world. Ruby has lived in England for two years, and the returning to her hometown, Madrid.
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