Securities and Futures Commission (SFC) Releases Circulars on Tokenized Assets
The Securities and Futures Commission (SFC) in Hong Kong has published two circulars aimed at regulating the tokenization of digital assets. These circulars provide guidance for intermediaries involved in tokenized securities activities and outline the criteria for tokenizing authorized investment products. According to the SFC, intermediaries that issue or have substantial involvement in tokenized securities retain overall responsibility for the tokenization process, even if they outsource certain aspects to third-party vendors. The circulars also require Virtual Asset Trading Platform Operators (VATPs) to establish SFC-approved compensation arrangements to protect against potential security token losses. The SFC is open to considering exemptions for specific Tokenized Securities on a case-by-case basis to offer flexibility in the regulatory framework.
Emphasis on Investor Protection
The SFC reaffirms its commitment to investor protection by cautioning residents about dealing with unregulated platforms. In a previous announcement, the SFC highlighted the risks associated with JPX, an unapproved cryptocurrency exchange that has since halted some transactions amidst accusations.
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