Markets News Report
January 24, 2024

Hong Kong SFC Emphasizes Virtual Asset Activity Regulation in Strategic Roadmap 2024-2026

Hong Kong Securities and Futures Commission Unveils Roadmap for 2024-2026, Promotes Regulatory Guidance on Virtual Asset Activities

Statutory body entrusted with overseeing the securities and futures markets in Hong Kong, Securities and Futures Commission (SFC) issued its latest “Strategic Focus from 2024 to 2026.” The document outlines priorities for the next three years, responding to evolving market conditions and guiding market development to safeguard the city’s standing as a world-class financial center.

Among the four strategic priorities, the Hong Kong’s SFC highlights the significance of leading financial market transformation through technology. 

Regarding virtual assets, the SFC aims to provide regulatory guidance on emerging virtual asset activities and establish the regulatory framework for virtual asset trading platforms. 

While supporting the tokenization of traditional products, the SFC plans to focus on safeguarding the interests of investors. Furthermore, SFC will promote the development of a responsible and secure fintech ecosystem by leveraging underlying blockchain and Web 3 technologies. 

Additionally, SFC will establish stronger connections with local and international law enforcement agencies to address criminal activities and effectively combat financial crimes in the rapidly evolving landscape of technology. This approach reflects a commitment to balancing innovation with regulatory safeguards to maintain the integrity of the financial system.

According to SFC, giving priority to financial market transformation through technology aims to strengthen the fundamental aspects of the city’s capital markets, driving their sustainable development, and enhancing their competitiveness.

Hong Kong Regulatory Landscape Advances with Digital Asset Emphasis

The regulatory body previously announced its intentions to release additional policy papers and circulars related to tokenized assets, stablecoins, and cryptocurrency trading. This aligns with the ongoing initiatives to establish Hong Kong as a hub for Web3 technologies in the Asian region. 

Recently, the SFC released the revised “Joint Circular on Virtual Asset-related Activities of Intermediaries,” specifying that SFC-authorized virtual asset funds are restricted to investing in virtual asset tokens directly or indirectly on licensed virtual asset trading platforms. To ensure compliance, fund companies are mandated to uphold a strong track record of adherence to regulations. Additionally, they must have at least one qualified staff member possessing relevant experience in virtual asset or related product management. 

Moreover, the Financial Services and the Treasury Bureau of Hong Kong (FSTB) and the Hong Kong Monetary Authority (HKMA) collaboratively released a public consultation document to solicit feedback on legislative proposals concerning the oversight of stablecoin issuers.

The proposed legislation introduces a licensing system, where eligible fiat stablecoin issuers would be required to secure a license from the HKMA, signifying an effort to enhance regulatory frameworks and ensure effective supervision in response to the evolving landscape of stablecoin activities.

Hong Kong has positioned itself as a favorable regulatory environment for cryptocurrencies, reflecting the government’s proactive approach in encouraging innovation within the financial sector.

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About The Author

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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Alisa Davidson
Alisa Davidson

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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