HK Outlines Regulatory System for Virtual Asset Sector

blockchain.news:

The Hong Kong government is working to establish a regulatory system for the virtual asset industry, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu wrote in his blog.

In a letter to the virtual asset industry forerunners, Hui said that key measures include a licensing regime for the virtual asset service providers, contemplating the regulation of payment-related stablecoins. In addition, to provide traditional financial institutions with guidelines on offering virtual asset-related services to clients.

The government and financial regulators rolled out these measures to build a systematic development and operation of the virtual asset sector and tackle money laundering risks, he said. Also, these measures aim to «build up market confidence, and hence provide a pathway to its sustainable development.»

Following the new requirement introduced by the Financial Action Task Force, licensing regime for virtual asset service providers will be established as a regulatory measure, he said. Therefore, virtual asset exchanges will have to apply for a licence from the Securities and Futures Commission (SFC) before providing services in the city under the proposed licensing regime.

Both securities-type virtual assets and non-securities virtual assets such as Bitcoin are subject to the licensing regime.

Hui noted that these regulatory actions are being taken to create a fair balance in requirements and obligations between virtual assets and traditional financial institutions in areas such as anti-money laundering and counter-terrorist financing as well as investor protection.

Due to the technology-driven nature of virtual asset trading, requirements to address potential risks such as system failures and