- Hong Kong strengthens crypto trading regulation
- New licensing for OTC operations
- Conclusions and next steps
Hong Kong is reportedly considering involving the Securities and Futures Commission (SFC) in licensing over-the-counter (OTC) crypto trading services, which may tighten the regulatory framework for cryptocurrency operations in the city.
Hong Kong strengthens crypto trading regulation
According to a report by the South China Morning Post, the SFC is exploring a new licensing regime for OTC crypto services alongside the Customs and Excise Department (C&ED) following the JPEX scandal, which resulted in losses exceeding $200 million.
New licensing for OTC operations
Previously, OTC services were solely regulated by the C&ED, but recent discussions indicate a shift towards a combined regulatory approach. The SFC has been consulting industry players about the potential new regime and evaluating cryptocurrency custodian service regulations. These discussions are in the early stages and subject to change.
Conclusions and next steps
Hong Kong's regulatory landscape is evolving, with new licensing requirements for crypto exchanges and the introduction of crypto exchange-traded funds. However, concerns persist among local players. In March, Alessio Quaglini, CEO of crypto custodian Hex Trust, voiced worries about proposed OTC regulations, suggesting that stringent requirements could drive businesses like Hex Trust to relocate to more crypto-friendly jurisdictions.
Hong Kong continues efforts to strengthen the regulation of the cryptocurrency market, which may lead to significant changes for local industry participants.
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