Hong Kong’s crypto rules set a high bar for ‘good reason,’ says SFC advisor

cointelegraph.com:

The standards for Virtual Asset Service Providers (VASPs) in Hong Kong are set “incredibly high” as the Securities and Futures Commission (SFC) is wanting the crypto industry to match the same compliance standards as traditional financial firms.

Speaking to Cointelegraph at the Hong Kong WOW Summit, Lucy Gazmararian, the founder of crypto venture firm Token Bay Capital and an SFC Fintech Advisory Group member explained that while “the bar is set high” they’re in place for a “good reason.”

The SFC published a consultation paper on Feb. 20 that considered whether licensed VASPs should serve retail investors and what standard of investor protection measures should be imposed.

Anti-money laundering (AML) and Know Your Customer (KYC) policies were also discussed.

Gazmararian said these high standards may pose challenges for the crypto industry in Hong Kong over the short term.

“The issue is that crypto businesses are often in the startup phase,” she explained. “Many have funding but not huge amounts, not hundreds of millions.”

“To comply with the framework does incur significant costs,” she added, citing the need for local VASPs to have insurance, independent assessment reports and store crypto in cold storage.

With a solid regulatory framework in place, Gazmararian believes more well-capitalized financial firms will be willing to help promising startups get off the ground.

“I think companies that do get the license are going to be upholding the most stringent standards so the bar is set high but I think for good reason,” Gazmararian said.

“Cryptocurrency platforms are part of the entire Web 3.0 ecosystem, and we strongly support the development of the entire Internet ecosystem.

The SFC encouraged individuals, corporations and crypto