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‘Many Crypto Exchanges Have Expressed Interest In Joining Regulatory Sandbox’ , said CEO of Hong Kong Securities and Futures Commission

Hong Kong’s Securities and Futures Commission (SFC) will set out a regulatory approach to cryptocurrency exchanges after having a better understanding of their mode of operation, but it is too early to say whether or not virtual asset trading platforms will be barred from listing on the city’s stock exchange, SFC’s Chief Executive Ashley Alder said on Tuesday.


Hong Kong’s securities watchdog proposed a regulatory regime known as a “sandbox” for crypto exchanges roughly a month ago as part of its new set of rules governing cryptocurrencies. Digital asset exchanges that wish to apply for a licence in Hong Kong need to sign up for the sandbox, under which they can continue to trade while negotiating with the SFC on their licensing requirements. But the new approach does not apply to platform operators trading virtual assets that are considered futures contracts or derivatives.

Alder said a number of cryptocurrency exchanges so far have showed interest in joining the regulatory ‘sandbox’ , local broadcaster RTHK reported on Tuesday. But he added that it remains to seen how many exchange operators will join the sandbox because in this stage the SFC will continue to negotiate with them to ensure compliance, and no formal regulatory approval will be given.

“ Given that unregulated virtual currency tradings in other jurisdictions lead to investors’ huge financial losses, Hong Kong will decide on the regulatory approach to crypto exchanges after having a full understanding of their mode of operation. ” Alder said.

He emphasized that if crypto exchanges deal with security-like tokens, they should be regulated by the SFC .Further, the watchdog will cautiously monitor whether the operation mode and credit risks of the exchanges that offer cryptocurrency-related futures contracts and derivatives  have fulfilled regulatory requirements.

Hong Kong aspires to be a global fintech hub by creating a favorable environment and a reasonable regulatory framework for cryptocurrency players, but policies remain very  ambiguous with how to deal with exchanges that trade digital assets considered futures derivatives contracts and there is no specific timetable to license digital assets trading platforms.


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