During the Fintech Week 2024, Dr. Eric Yip, the Executive Director of Intermediaries at the Securities and Futures Commission (SFC) of Hong Kong, elaborated on the regulatory body’s strategic initiatives to foster the growth of Hong Kong’s virtual asset trading platform (VATP) sector.
Streamlining the Licensing Process
One of the key priorities for the SFC is to expedite the licensing process for VATP applicants classified as ‘deemed-to-be-licensed’. This fast-tracking initiative will incorporate on-site inspections and continuous dialogue with senior management and controllers of the platforms to ensure they adhere to required compliance and transparency standards.
The SFC anticipates that by the end of this year, the first group of formal licenses for VATP applicants will be approved. Currently, there are 14 crypto trading platforms under the ‘deemed-to-be-licensed’ category, including prominent names like Crypto.com and Matrixport. However, as it stands, only three exchanges have received full licensing from the Hong Kong regulator.
Establishment of a Consultative Panel
Moreover, the SFC has plans to introduce a consultative panel for VATPs by early 2025. This panel will feature representatives from each licensed VATP, facilitating constructive dialogue between the regulatory body and industry participants. The goal is to enhance the SFC’s understanding of industry challenges and opportunities, thereby informing its future policy decisions. Insights obtained from this panel, along with feedback from other stakeholders, are expected to contribute to an upcoming white paper detailing regulatory priorities for the virtual asset arena.
Collaborative Regulatory Efforts
The SFC is also focusing on further regulatory measures, working closely with the Hong Kong SAR Government and other relevant regulatory agencies to create comprehensive frameworks governing virtual asset trading services and custodial provisions. This collaboration aims to ensure a robust regulatory environment that can effectively support the evolving needs of the virtual asset industry.
Support for Tokenisation Initiatives
In addition to regulatory frameworks, the SFC is actively supporting tokenisation initiatives as part of its broader strategy. Notably, the Commission is engaged in the Hong Kong Monetary Authority’s Project Ensemble. This initiative is designed to establish a foundational infrastructure for tokenisation in the asset management domain, setting industry standards for the settlement of tokenized assets.
A Balanced Approach to Regulation
Dr. Yip emphasized that the SFC will maintain a pragmatic and proactive approach to building a holistic regulatory framework within the virtual asset sector. He stated the regulator’s dual commitment to ensuring investor protection while simultaneously fostering market growth. This balanced approach is crucial for the sustainable development of Hong Kong as a leading hub for virtual asset trading.