On 1st November, the Hong Kong Securities and Futures Commission [SFC] announced that virtual assets will now see a new regulatory approach by the body. The SFC defined virtual assets as “a digital representation of value. Examples include ‘cryptocurrencies’, ‘crypto-assets’ and ‘digital tokens’.
Furthermore, the regulatory authority opened the announcement by stating that this move by the SFC has been taken in order to guard the interests of those who choose to invest in this asset class. The body will also impose licensing and other terms and conditions on the firms dealing in virtual assets and portfolio management for digital assets.
Ashley Alder, the Chief Executive Officer of SFC also stated:
“The measures announced today allow us to regulate the management or distribution of virtual asset funds in one way or another so that investors’ interests would be protected either at the fund management level, at the distribution level, or both.”
He also spoke about building up a safe environment for the investors and achieving effective results for those involved in the space. Here, he said:
“We hope to encourage the responsible use of new technologies and also provide investors with more choices and better outcomes.”
The new framework is also set out to explore the nature of cryptocurrencies and other virtual assets in terms of whether they are suitable for further regulation. The platforms associated with the trading of virtual assets will also go under such exploration.
The process of legal licensing and regulatory process will begin only after the SFC has judged these platforms to be fit for the purpose. Once the exploration is completed, the body stated that it will grant licenses to these platforms and keep them under close supervision.
However, in the announcement, it was also concluded that no license or regulatory framework can ensure cent percent safety of the investor funds and place them under the umbrella of full protection. SFC also acknowledged that it will be observing any developments happening the cryptocurrency space hereon.