The Chief Executive Officer of the Securities and Futures (SFC) Commission of Hong Kong, Ashley Alder, said during a Fintech Conference that the financial regulator will issue a regulatory framework for cryptocurrency exchanges in the country.
There is an ongoing debate among market watchdogs if they should regulate the cryptocurrency industry and how they can do so. They are trying to broaden their focal point beyond the protection of investors from digital asset scams.
The issue of Facebook’s Proposed cryptocurrency, Libra, has motivated regulators across the world to look at broader systemic risks of stablecoins and cryptocurrencies at large.
This new set of rules will bring to light the standards that the financial regulator expects conventional securities brokers to live up to.
They will include anti-money laundering rules, know-your-customer requirements, and aspects of custody which will increase the protection of investors, aside from issues that are directed specifically to the cryptocurrency industry.
The initiative on digital currencies was first announced last year at the 2018 Fintech Week by Alder. It also included a “sandbox” that will enable cryptocurrency exchanges to discuss on ways to supervise digital currencies.
He said, “We met with a large number of crypto platform operators to see… whether some platforms were, in fact, capable of operating in a regulated environment.”
Alder further noted that after a thorough examination of these operators, they decided to regulate some of them.
The report went on to mention that the SFC will take on an “opt-in” approach since the regulations will not apply to exchange unless they deal with securities, and this according to Alder, does not include Bitcoin.
The SFC also issued a statement today, laying emphasis on the risks associated with trading virtual asset futures. Alder warns that exchanges that offer such services are likely conducting an illegal activity under the laws of Hong Kong.