Hong Kong’s SFC Steps Up Information Regulation Among VATPs

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  • The SFC has stepped up its regulatory approach towards information dissemination.
  • SFC’s aim is to reinforce the information dissemination procedure following recent concerns.
  • Henceforth, VATPs have to comply with newly released measures in the publication of lists.

The Securities and Futures Commission (SFC) of Hong Kong has stepped up its regulatory approach towards information dissemination and investor education on the Virtual Assets Trading Platforms (VATPs). In a recent publication, the independent regulator said the latest step would reinforce the information dissemination procedure following some recently identified concerns.

The SFC acknowledged the potential benefits that the technology behind digital finance and virtual assets can bring to the financial markets. However, the regulatory body also identified the risks of decentralization, money laundering, investor protection issues, and other vices associated with virtual assets (VAs) and related activities.

According to the regulator, VA trading is integral to the Web3 ecosystem. It noted that the risks it has identified are consistent with the latest international consensus among financial regulators. The SFC’s publication affirmed that under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO) that came into full effect on June 1, 2023, the gap in the SFC’s licensing and supervision powers over VATPs has been closed via the new licensing regime for centralized VATPs.

Ensuring suitability in the onboarding process, enhanced token due diligence, admission criteria, and disclosures are some areas where the SFC has stepped up supervision. It has imposed stringent requirements in these areas to allow SFC-licensed VATPs to serve retail investors.

Henceforth, the SFC has mandated all VATPs operating within its jurisdiction to comply with some newly released measures regarding the publication of VATP lists. They are to ensure that information is disseminated in a clear, transparent, and timely manner. The SFC has also decided to enhance and issue a dedicated list of suspicious VATPs, which is easily accessible and prominent on the SFC’s website. 

Other steps by the regulator under the new adjustment include collaborating with the Investor and Financial Education Council (IFEC) in launching a public campaign to raise awareness against fraud and improve its intelligence-gathering process relating to businesses around VAs.

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