A Blanket Ban On Cryptocurrency Trading Is Unnecessary, Says Hong Kong’s Top Financial Regulator
Hong Kong’s financial watchdog is looking to provide a more sound regulatory framework for cryptocurrency exchanges instead of a full ban, in a bid to strengthen investor protection, reported South China Morning Post (SCMP) on October 15.
The outgoing chairman of the Hong Kong Securities and Futures Commission (SFC), Carlson Tong Ka-shing, said in the interview with the SCMP that it would be in vain for financial regulators to impose a blanket ban on cryptocurrency trading given the global nature of this venture.
“We do not think imposing a total ban on these platforms is necessarily the right approach, and it will not work in today’s internet world when trading can cross national boundaries,” said Tong, who is due to pass his position in the SFC to Tim Lui Tim-leung this Friday. “Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets.”
As cryptocurrencies are gaining popularity around the world, the knowledge of this nascent technology is limited and cryptos currently cannot be treated as securities. Considering that crypto tradings still do not fall under the SFC’s current requirements, the top financial regulator called for a formalized regulatory framework for the emerging market in Hong Kong.
“But no other international market currently has a comprehensive regulation framework for these cryptocurrency platforms. We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue, while at the same time ensuring investors interest are being protected,” Tong added.
The SFC’s regulatory stance and move are well well received by cryptocurrency exchange operators in Hong Kong’s jurisdiction. According to the SMCP, the chief operating officer of the leading bitcoin exchange BitMEX, Angelina Kwan told the newspaper that they would work closely with the SFC on the proposed regulations and hoped those guidance would keep pace with market development. And cryptocurrency unicorn Circle’s CEO Jeremy Allaire said the company will proactively work with the government on those frameworks.
In order to ensure the investors’ interests are well protected, the SFC has issued warnings over the risks associated with crypto tradings and ICOs for many times, while required cryptocurrency platforms to become licensed trading venues.In June, the SFC declared in its annual report that “ it is keeping a close watch on crypto and ICOs and will intervene when appropriate”.
Adopting a totally different stance from Mainland China’s outright ban on crypto tradings, Hong Kong has become the home to many cryptocurrency startups from both mainland and other countries with its more relaxed regulatory environment.And the the special administrative region is gaining a reputation of the global fintech center.