Hong Kong: Total Ban on Crypto Exchanges Unnecessary
Hong Kong’s Securities and Futures Commission (SFC) is reacting to the high interest in cryptocurrencies such as bitcoin, by imposing regulations on the sector. The SFC’s chairman Carlson Tong Ka-shing spoke with the South China Morning Post and insisted that autonomous, self-governing administrative region of the south-east mainland will not follow China’s approach by banning cryptocurrencies entirely.
He stated, “We do not think imposing a total ban on these platforms is necessarily the right approach. Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets.” Rather, the SFC is seeking to adopt a formal regulatory framework for domestic cryptocurrency trading.
Ton also stressed that cryptocurrency trading does not include the custodian, audit, and valuation requirements under the SFC’s Securities and Futures Ordinance. He stated, they “may not qualify as securities” and added “We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue, while at the same time ensuring investors interest are being protected.”
Domestic exchanges welcomed the suggestion. BitMEX hired a formal regulator as its operations chief operating officer. The Hong Kong crypto market has also been scrutinized by the country’s securities regulator in recent years. In March, the authority closed an initial coin officer citing “potential unauthorized promotional activities and unlicensed regulated activities.”