Hong Kongโs Securities and Futures Commission (SFC) will require corporations intending to locally offer retail cryptocurrency products to comply with investment custody and segregation regulation.
The agency announced the new regulations following a recent consultation.
Hong Kong Retail Investors Cannot Hold Stablecoins
Early cryptocurrency license applicants can only list Chainlink, Cardanoย (ADA), Polygon, Avalancheย (AVAX), Solanaย (SOL) Bitcoin, Ethereumย (ETH), Bitcoinย (BTC) Cash, Litecoin, and Polkadotย (DOT). These coins appear on at least two of the major cryptocurrency indexes from Galaxy, Bitwise, WisdomTree, 21Shares, and Nasdaq.
Licensees may not advertise specific cryptocurrency assets or engage in proprietary trading or lending. Theyย need likewise employ measures to prevent money laundering and terrorism financing.
The approved regulations will prevent traders from holding cryptoย stablecoins until the SFC tables new regulations. Investors cannot earn yields similar to customers of Gemini Exchangeโs Earn product.
Upย toย now, the SFC has not isย still greenlighted applications for corporations wishing to come under the new regime.
The SFC willย gazetteย virtual investment platform requirements on May 25 to become effective on June 1.
SFC Regulation Welcomed Regardlessย of Restrictions
Hong Kong received plaudits from the cryptocurrency industry when it announced its willingness to embrace cryptocurrency regulation, especially amid a reluctance from the Unitedย States to consider a new framework.ย
Binanceย Cryptoย exchange CEO Changpeng Zhao has claimedย that โbad restrictiveโ regulations are better than no regulations. He likewise criticized enforcement without clear regulations.
Chinaโs hostility towards cryptocurrency has seen numerous corporations consider Hong Kong, including research corporations Kaiko and cryptocurrency exchange Bybit. Bybit desiresย to make Hong Kong the base of its Asian operations.ย
American cryptocurrency entrepreneur Cameron Winklevossย predictedย theย following bull run would start in Asia.
Brian Armstrong, the CEO of the largest cryptocurrency exchange in the Unitedย States, Coinbase,ย warnedย that the Unitedย States would get left behind amid regulatory developments in the European Union, Hong Kong, and the U.K.
Nonetheless, some of theย preliminary excitement abated during the consultation process, which saw lawmakers from the Asian region err on the side of caution.ย
Alessio Quaglini of custodian HexTrust has criticized a requirement that a wholly-owned subsidiary of the licensee must hold customer assets.
He claimedย that customer assets should be separate from an exchange. Corporations have alsoย questionedย theย expense of licenses and whether a cryptocurrency company can operate profitably in the Asian region.
