Today, the Securities and Future Commission (SFC) initiated a consultation about the proposed rules for providers of brokerage firms for virtual assets.  Centralized digital service trading platforms conducting trading in Hong Kong or advertising to Hong Kong users will be required to get a license from the SFC beginning on June 1, 2023.

SFC Proposes Regulations for Digital Service Marketplaces to Safeguard Investors

The SFC proposes regulations for digital service marketplaces that are similar to those already in place. It includes registered securities dealers and electronic trading venues underneath the SFC Law. Moreover, the SFC has used the occasion to suggest changes to certain standards under the current framework.

The SFC is soliciting feedback as part of the consultation process. It focuses on whether or not licensed platform operators should be allowed to serve individual investors. It consists of such things as ensuring worthiness in onboarding customers and coin admission.

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According to SFC CEO Ms. Julia Leung, the proposed regulations for digital service trading platforms contain rigorous safeguards to protect shareholders. It maintains the same company, same risks, and same laws premise that has been in place since 2018. In the aftermath of the latest upheaval and the failure of several of the most prominent cryptocurrency trading platforms across the world, there is widespread agreement among financial watchdogs all over the world on the need for legislation in the digital service field. Furthermore, it will safeguard investors and keep significant risks in check.

SFC Advises Digital Service Trading Platforms to Prepare for New Framework, Enhances Investor Training

Providers of digital service trading platforms, such as those that already exist, and intend to obtain a license, should start reviewing and revising their controls and systems in anticipation of the new framework. Those who have no intention of applying for a permit should begin making plans for a smooth exit from market.

The SFC intends to keep collaborating with the Investors Council and Financial Awareness Commission. It will improve investor training for Hong Kong people. And it has stated that it will publish listings on its site. Moreover, it will notify the general population of the multiple governmental positions of online trading platforms. To further improve investor learning for the Hong Kong community, the SFC will maintain its partnership with the Investors.