The regulation of the cryptocurrency sector is becoming stronger in Asia and Hong Kong is the latest country set to tighten its regulation of the industry.
Cryptocurrency laws to be tightened by authorities
The Securities and Exchange Commission of the country (SCF) has concluded plans to tighten the less-stringent cryptocurrency regulations as they look to combat issues such as crypto-crime and money laundering.
Hong Kong at the moment has one of the least stringent cryptocurrency rules in Asia but is now set to follow the footsteps of mainland China and put in place rules that will properly regulate the crypto sector. Hong Kong is regarded as the financial center of Asia and one of the leading financial hubs in the world, thus it is not surprising that the SFC is set to enforce better cryptocurrency laws especially the ICO sector that has presented problems to both investors and regulators over the past few months.
The Chinese government has banned most cryptocurrency activities in the country which led to some of the companies moving to Hong Kong. The entry of crypto and blockchain companies into Hong Kong has made it necessary for regulators in the region to put together more stringent laws. The SCF pointed out that investment funds that hold 10% or more of digital assets will be required to obtain a license. They added that the investment funds will only be allowed to sell their products to professional investors and not the regular ones.
SCF is planning to put together a voluntary scheme that would require crypto exchanges to test their digital assets before they decide if they need to obtain a license or not. This move is dubbed as “temporary regulatory sandbox” and is aimed at making it easier for exchanges to decide if they want to move forward or not.
Hong Kong regulators talking about regulations for months
This latest development doesn’t come as a surprise to many as the SCF has been talking about bringing tighter regulations to the crypto industry in Hong Kong. Back in February, the regulator issued a warning to seven cryptocurrency exchanges after receiving complaints from investors. With the regulations to be put in place, Hong Kong is set to follow the footsteps of leading economies like China, Switzerland, South Korea, Japan, and others who are also rolling out regulations for the new industry.
Market experts believe that tightening the cryptocurrency laws will help safeguard investors and help in the growth of the industry. However, some experts don’t believe that. Daiwa Institute of Research professional Daisuke Yasaku is of the view that tighter regulations will be a bad thing for Hong Kong. He stated that “The cost of regulations will be high. The requirements of the SFC initiative may prove too burdensome for some operators.”