In February 2023, the SFC announced a new licensing regime for centralised virtual asset trading platforms (“VATPs”) that trade non-security tokens, which will come into effect from June 01, 2023. The intention is to update the present regime to take into account the various changes that have occurred within the virtual asset sector, and to reconsider the balance between investor protection vis-à-vis market development and furthering Hong Kong’s position as a forward-looking hub for new businesses, including those arising from fintech.
Upon commencement of the new regime, all centralised VATPs carrying on their business within Hong Kong, or actively marketing their services to HKSAR-based investors, will need to be licensed and regulated by the SFC, irrespective of whether a token would be deemed a security under the Securities and Futures Ordinance (“SFO”).
The FTAHK has prepared a collective response from its members with a view to assist the SFC in finalising the proposed regulatory requirements applicable to VATPs. Some of the key views of FTAHK and our members are:
- supportive of licensed platform operators being permitted to provide their services to retail investors, provided that robust protection measures are implemented to protect such investors.
- aligned with the SFC’s intention to adopt the concept of “same business, same risks, same rules,” to govern VATPs.
- generally supportive of greater investor protection and the various measures proposed, but highlighting that the proposed measures are likely to impose a significant barrier to entry to new firms who are looking to establish themselves in the Hong Kong market and may push such firms to consider other jurisdictions for their operations.
Please refer to the full report to see the detailed responses.