SFC New Regulatory Approach for Virtual Assets
The Securities and Futures Commission (SFC) today issued a statement setting out a new approach which aims to bring virtual asset portfolio managers and distributors of virtual asset funds under its regulatory net.
A virtual asset is a digital representation of value. Examples include "cryptocurrencies", "crypto-assets" and "digital tokens".
SFC will impose licensing conditions on firms which manage or intend to manage portfolios where 10% or more of the gross asset value of the portfolio is invested in virtual assets, irrespective of whether the virtual assets meet the definition of "securities" or "futures contracts".
SFC also sets out a conceptual framework for the potential regulation of virtual asset trading platforms commonly known as cryptocurrency exchanges.
Under this conceptual framework, SFC will explore whether virtual asset trading platforms (cryptocurrency exchanges) are suitable for regulation in the SFC Regulatory Sandbox.
SFC will observe the operations of interested trading platform operators and their compliance with proposed regulatory requirements in the Sandbox environment.
If it is decided at the end of this stage that it is appropriate to regulate platform operators, SFC would then consider granting a licence and putting them under its close supervision.
Alternatively, SFC may take the view that the risks involved cannot be sufficiently addressed and no licence shall be granted as protection for investors cannot be ensured.
For legal advice or services on cryptocurrency & blockchain matters, please contact CHOW & CHEUNG, Hong Kong solicitors & notaries [cac@ccsn.hk]
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