- Industry participants in Hong Kong are preparing to allow customers to trade crypto.
- A digital asset leader said brokers must prove client asset custody and insurance.
- A recently amended act required virtual asset firms to seek licenses from the SFC.
Industry participants in Hong Kong’s financial services sector are effectively laying the framework to allow retail customers to trade virtual assets in the coming months following a critical amendment to provincial legislation.
A local media house quoted Robert Lui, digital asset leader at Deloitte Hong Kong:
We have seen a lot of local brokers and fund managers seeking advice from us about the licensing requirements under the new regulatory regime. To safeguard client interests, they must show the SFC they have internal controls, client money custody, and insurance arrangements.
Lui added that authorities would likely let ordinary investors trade virtual assets with high market capitalization and liquidity. In September 2022, more than a dozen potential companies showed interest in security token offerings. Discussions on how to promote Security Token Offerings (STOs) in Hong Kong were held with representatives from the Financial Services and Treasury Bureau (FSTB), the SFC, and HKInvest.
In December, the Hong Kong government authorized an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Act, placing virtual-asset service providers within the authority of the Securities and Futures Commission (SFC) beginning in June of this year.
Under the updated act, all virtual asset exchange businesses would get a digital asset regulator license. The SFC required licensed VA exchanges and wholly-owned subsidiaries to present audited financial statements and other financial data regularly.
In a related development, Thailand’s Securities and Exchange Commission recently published that it was designing a new process to improve digital asset governance, including more stringent regulations to increase investor protection.
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