Hong Kong’s quick growth as a cryptocurrency hub is a major concern for financial regulators and needs the “Right Approach” says, outgoing Chairman of the city’s Securities and Futures Commission (SFC), Carlson Tong Ka-Shing.
The focus of the country’s highest securities regulatory body is to offer greater protection to investors as the demand for this peer-to-peer payment technology grows at an alarming pace in the island.
The new rules are a bid to monitor and exercise greater control over these non-fiat trading platforms transactions.
The former official believes that the regulatory body is restricted “technically” because its scope is by and large limited to securities only.
Tong suggests that the “right approach” is critical to implementing this system since trading is a “crosses national boundaries.”
The older systems of transaction logging are redundant in the new Decentralized Ledger Technology (DLT). Besides, totally banning them would be an immature act.
If cryptocurrencies are banned in Hong Kong, says the financial official, it would be a loss to the exchequer and traders would simply transact from overseas market platforms. Hence, the approach is critical to keeping the business of cryptocurrencies in Hong Kong itself.
Considering the explosive use of this type of alternate payment, smart contract methods being adopted in most economies across the world, cryptocurrencies are marking the transition to digitized commerce.
Thus these platforms should be introduced in a phased manner. The adaption of new age economical lexicons will be slow given its novelty. Additionally, centralized stock exchanges are run by organizations which have so far been unregulated.
Warn Crypto Exchanges
The exchanges are typically overseen by organizations which look at the operational, security and maintenance aspect and grant users access to the platform at some minimal fees. The issue is therefore with relation to their unregulated status and SFC has already issued warnings in this regard in recent times.
SFC has warned investors to be wary of making speculative investments in trading with cryptos and the operators too to comply with regulatory needs.
However, in the past few months the onslaught of transactions has driven the regulatory body to create stringent framework since these are not in the traditional securities-format and do not qualify as custodian, valuation or audit-based regulations either.
Comprehensive regulation is the need of the hour, such that trading on this platform grows to be of the same standard as licensed trading.