Hong Kong is ready and determined to toughen the cryptocurrency regulations. They have plans of making sure that the Securities and Future Commission will watch exchanges, traders and variously related corporations. Hong Kong is one of the most favored nations when it comes To ICO’s although the countries rules on cryptocurrency are stringent as compared to the regulations in China. China banned all crypto related commercial activities. With the demand of ICO in Hong Kong, Frauds and money laundering have become an issue of concern. This has left Hong Kong with no other choice than toughening cryptocurrency rules and regulations.
Securities and Futures Commission has laid out its guidelines which states that if over 10% of the assets are in the form of Bitcoin or other Cryptocurrencies, Investment funds will require a license. It also mentions that these products can only be sold to professional investors. This scheme allows exchanges to test their virtual currency in a ‘regulatory sandbox’ which will then tell you whether or not you require a license.
With these regulations functioning, companies will only be eligible to buy ICO’s if their tokens comply with SFC’s requirements. Customers accused many exchanges that they were not able to withdraw fiat or cryptocurrency from their accounts. SFC issued warning to many such exchanges in February. Some exchanges were also held responsible for manipulating markets and misusing assets.
Daisuke Yasaku from Daiwa Institute of Research said in his statement that, ‘As a financial center closely linked to mainland China, Hong Kong is taking steps in the right direction with measures like requiring identity verification for transactions’ Yasaku further highlighted that according to the design of the platform, an exchange could be subjected to regular and high profile inspections.
Timothy Loh, A law firm manager in the vicinity, said in his statement that ‘The requirements of the SFC initiative may prove too burdensome for some operators.’ Current market shares may also be affected by this new framework. It is expected that some of the exchanges might not join this framework for the same reason. Over the long run, strict regulations will lead to better investor confidence.