HK’s outgoing securities regulator advises greater crypto oversight
Hong Kong’s securities regulator is seeking greater reach in its oversight of the markets to tighten its grip on cryptocurrencies to ensure greater investor protection.
Carlson Tong Ka-shing, outgoing chairman of the HK Securities and Futures Commission (SFC), told the South China Morning Post (SCMP) this weekend that the SFC was currently restricted in its legal regulatory reach to securities markets only.
Despite these restrictions, the regulator has issued several warnings in recent months to investors, advising a wary approach to trading on unregulated exchanges. It has also told exchange operators that they must abide strictly to current SFC regulations.
Formal regulation of crypto markets
Tong (left), who hands over the reins of the SFC to Tim Lui Tim-leung this week, said the market watchdog was becoming ever-more anxious to introduce formal cryptocurrency regulations.
“We have to carefully consider the regulatory approach for these platforms because they are new technology and may not qualify as securities,” he told the SCMP.
He added: “They do not fit in the custodian, audit or valuation requirements, for instance, normally expected under the Securities and Futures Ordinance.
“But no other international market currently has a comprehensive regulation framework for these cryptocurrency platforms. 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.”
No outright ban
Tong also said in the SCMP interview that he didn’t believe a total ban on digital asset platforms was appropriate, saying such a move would not work as internet-based trade can cross national boundaries.
“Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets,” he said.
Nevertheless, crypto exchanges appear keen to work with the SFC on any proposed changes to the regulatory landscape.
Angelina Kwan, chief operating officer of BitMEX exchange, told the SCMP: “We hope the guidelines or regulations being considered will keep pace with market developments.
“We hope that by sharing information about cryptocurrency markets and market developments in this space will help international regulators better understand cryptocurrency as an asset class.”