The Hong Kong Securities and Futures Commission (SFC) has unveiled new staking rules for cryptocurrency exchanges, which is part of a broader initiative to position the city as a leader in Web3 and digital assets.
Requirements for Crypto Exchanges
According to the new rules, crypto exchanges must obtain written consent from the SFC before launching any staking services. Furthermore, they are prohibited from transferring digital assets engaged in staking to third parties. Exchanges must ensure transparency by disclosing risks, fees, withdrawal processes, and asset custody methods. They are also required to report their activities periodically to the SFC.
Rules for Crypto Funds
The staking rules also apply to crypto funds that have invested more than 10% of their assets in digital currencies. These funds can only use publicly available digital assets on SFC-authorized platforms. Fund managers must ensure that staking activities align with the fund's strategy. If such activities significantly alter the strategy or risk profile, the funds must inform their investors.
Support for Web3 and NFT Market
This regulatory update coincided with comments from Christina Choi, the SFC's Executive Director of Investment Products, at the Hong Kong Web3 Festival. She reaffirmed Hong Kong's commitment to building a robust Web3 ecosystem and cautioned against blindly following trends, citing a 70% drop in NFT trading volume over the past year as an example of market volatility. Choi also emphasized that Hong Kong ranks third in the Global Financial Centres Index and is looking to attract more Web3 businesses with transparent regulations.
The SFC's new staking rules highlight Hong Kong's strategic approach to strengthening its position in the digital asset and Web3 sectors, ensuring security and transparency for all market participants.
