One of Asia’s biggest crypto market - Hong Kong is all set to tighten regulatory measures for cryptocurrencies. Post the blanket ban initiated by China last year on cryptocurrency trading, ICOs and other related businesses, Hong Kong witnessed a huge inflow on investors money and businesses.
However, the growing concerns of money laundering and fraud in the global crypto market have forced Hong Kong regulators to step in and initiate necessary regulatory measures.
Following the Global Cue in Crypto Regulations
According to the report by Nikkei Asian Review, the Hong Kong Securities and Futures Commission (SFC) has announced to put crypto traders, exchanges, and other related companies, under its regulatory oversight.
As per the SFC guidelines, it is mandatory for the investment funds to obtain a license if over 10% of their portfolio comprises of investments made in crypto assets. Furthermore, under this license, these funds can sell their products only to professional investors.
Under the SFC’s “regulatory sandbox” crypto exchanges and businesses will also get the leverage to test these products at their end before applying for the license. Also, under the proposed regulations, companies can only issue ICOs for tokens if they meet the SFC’s requirements. One such caveat is that “the tokens must have existed for at least 12 months” before proceeding for the ICO.
In the wildly exploding crypto market earlier this year in February, the SFC received several complaints from investors who were unable to withdraw fiat or cryptocurrencies from accounts on crypto exchanges. Moreover, the exchanges were accused of being involved in market manipulation and asset misappropriation. The regulatory body was quick to swing in action and issued warning letters to exchanges who were a part of these illicit activities.
Global Agencies Stressing on Regulatory Measures
Over the last few months, not only individual countries but international financial institutions have stressed the need to include crypto regulations.
Last month, the Russian regulators asked the Financial Action Task Force (FATF) to take necessary measures while forming the new legislation for the crypto ecosystem.
Earlier this month at the G20 summit in Buenos Aires, Argentina, the G20 economies decided to have an International tax on cryptocurrencies. The first draft for the crypto taxation shall be submitted by the next G20 meeting in mid-2019, in Japan. The finalization of the tax structure and its implementation could occur by 2020.
At the same time, the IMF has also acknowledged the strong presence of cryptocurrencies in the global economy, as well as its underpinning blockchain technology that facilitates faster and low-cost cross-borders payments compared to the traditional systems.