Hong Kong Makes Major Crypto Move

Starting today, cryptocurrency exchanges can apply to be regulated by Hong Kong’s Securities and Futures Commission (SFC), as it published a framework for crypto exchanges.

The new rules covers aspects of custody, know-your-customer requirements, anti money laundering rules and market manipulation, besides issues specific to the cryptocurrency industry, Ashley Alder, Chief Executive of the SFC, said today at a fintech conference in Hong Kong.

“And it also zeros in on many of the new concepts we are getting used to, such as hot and cold wallets, forks, airdrops and the like. We will also set out the criteria for platforms to decide on the inclusion of a new virtual asset for trading,” he added.

According to Alder, the Commission examined “a large number of crypto platform operators” and concluded that “some could be regulated by us.”

However, the CEO stressed that they will make sure that platform operators can only provide services to professional investors, and then only to those who can demonstrate that they already have sufficient knowledge of investing in this area.

This announcement is “a seminal moment for financial services in Asia and points to increased acceptance of digital assets as new type of financial instruments,” Hugh Madden, CEO BC Group, a technology and digital asset trading company, told Reuters.

Meanwhile, Alder also stressed that the SFC is “extremely concerned” about platforms which offer virtual asset futures contracts to the public, especially contracts which are highly leveraged.

“So we will issue a second statement today which alerts investors to these risks. It also makes clear that those who offer virtual asset futures for trading may well be conducting an illegal activity,” Alder said.

The statement has already been issued.

Earlier today, it was announced that China’s state planner, the National Development and Reform Commission, has removed Bitcoin (BTC) mining from the list of industries that might be eliminated.

All this comes hot on the heels of the recent urge by China’s President Xi Jinping to accelerate the development of blockchain technology due to its importance “in the new round of technological innovation and industrial transformation” of China.