Hong Kong will supervise all virtual asset trading platforms, regardless of whether the platform trades securities certificates
On November 3, the Chief Executive of the Hong Kong Securities Regulatory Commission, Oudari revealed that a licensing system for encrypted assets will be launched soon, and all virtual transactions will be supervised, regardless of whether they trade securities-type certificates. The platform develops a set of “optional” regulatory frameworks, but these frameworks allow certain trading platforms to operate outside the scope of supervision.” (Note: Oudari once pointed out that the Hong Kong Securities Regulatory Commission considers Bitcoin not a security)
The “optional” regulatory framework that Oudari refers to is a framework that allows platform operators to independently choose whether to join the regulatory framework.
In this regard, Tony Tong, Chairman of the Hong Kong Blockchain Association HKBA, said, “Previously, Hong Kong’s virtual asset trading platform Virtual Asset Trading Platform VATP can choose to apply for a license or not to apply-as long as it does not involve Securities Token, then this For those companies that choose to apply for a license, it’s a bit unfair. They spend tens of millions of costs on compliance operations-buying insurance, Crypto Assets Insurance, etc. If everyone now needs to apply for a license unanimously, it will be fairer and more for the industry. positive”.
In fact, many small and medium-sized enterprises simply do not have enough manpower and financial resources to pay the fees for applying for and maintaining licenses. We (Global Securities Co., Ltd. GlobalSTOx) started to apply for a license in December last year. The application process includes hiring three ROs (responsible officers) responsible for compliance officers. They apply for the SFC license examination to the China Securities Regulatory Commission. The salaries of these ROs are very expensive. In addition, financial audit, Internal Control Audit, Security Audit, and the purchase of insurance Crypto Assets&Crime Insurance are also required. The cost of compliance operations is very high, compared with other SFC licenses 1, 2, 4, 6, and 9 The application fees are expensive. (Note: The VATP license of the virtual asset trading platform is the SFC No. 7 license)
“The cost is expensive, and I think it is good for the entire industry. At present, many large exchanges operate in Hong Kong, including Tether, BitMex, etc., and most of them choose not to obtain licenses. Now if all exchanges are required It’s more fair to the industry and more secure to users if they have licenses.”
Tony Tong further stated that because of the high cost of security and compliance, if some platforms get licenses and others do not, it will be difficult for platforms that get licenses to compete with those that do not operate without a license. In addition, many exchanges have serious security issues, so the Hong Kong Securities Regulatory Commission requires platforms to be licensed, also from the perspective of protecting investors.
“Usually it takes 6 to 12 months to apply for a license. The Hong Kong Securities Regulatory Commission has not officially issued any Virtual Asset Trading Platform VATP license. Although BC Technology Group announced that its OSL platform has obtained a letter of approval in principle from the Securities Regulatory Commission, But this is only the information disclosed by the listed company, not the official license announcement issued by the Securities Regulatory Commission SFC.HK.
“As the Hong Kong Blockchain Industry Association, we also strongly support peer practitioners in applying for compliance exchange licenses and operating compliance, and look forward to the government’s issuing of licenses to promote the healthy development of Hong Kong’s blockchain industry.”
According to previous reports, Hong Kong has a stricter level of supervision of digital assets and virtual assets than Japan, the United States and Singapore, and it has a lot of licenses. First, the main legal entity of the exchange must be registered in Hong Kong and be supervised by the Hong Kong Securities Regulatory Commission; second, the Securities Regulatory Commission will also examine whether the shareholders of the exchange have experienced violations of traditional financial institutions or violations in the digital asset industry; The China Securities Regulatory Commission also requires the provision of investor asset insurance and third-party audit standards. “Although the number of crypto exchanges consulted is large, there are not many platforms for license applications.”
