Hong Kong's SFC Stresses the Importance of Virtual Asset Regulation in Its Upcoming Strategic Plan

The statutory authority responsible for overseeing the securities and derivatives markets in Hong Kong, the Securities and Futures Commission, is committed to ensuring a robust regulatory environment. SFC ) issued its latest “Strategic Focus from 2024 to 2026.” The strategic document outlines key priorities for the next three years, addressing the changing dynamics of the market and fostering development to ensure Hong Kong's position as a premier financial hub.

Among the top four strategic objectives, the SFC underscores the crucial role of technological advancement in transforming financial markets.

In the sphere of virtual assets, the SFC is keen on delivering regulatory guidance that pertains to the rise of virtual asset platforms and establishing a solid regulatory framework for their operation.

While supporting the tokenization The SFC intends to safeguard investors' interests in traditional financial products. Additionally, it is advocating for the growth of a responsible and secure fintech ecosystem by harnessing cutting-edge blockchain and Web 3.0 technologies.

Furthermore, the SFC aims to forge closer ties with both local and global law enforcement to tackle illicit activities and combat financial crimes in the rapidly changing technological landscape. This strategy reflects a commitment to harmonizing innovation with adequate regulatory safeguards to uphold the integrity of the financial system.

The SFC believes that prioritizing the transformation of the financial market through technology is essential for fortifying the foundational elements of Hong Kong's capital markets, thereby promoting sustainable development and boosting competitiveness.

The Regulatory Framework in Hong Kong Evolves with a Focus on Digital Assets

The regulatory agency had previously stated its intentions to release additional policy documents and guidelines related to tokenization, stablecoins, and cryptocurrency trading, part of a broader effort to position Hong Kong as a leader in Web3 technologies across Asia.

Recently, the SFC published an updated version of the 'Joint Circular on Virtual Asset-Related Activities of Intermediaries,' which clarifies that funds authorized by the SFC can only invest in virtual asset tokens on licensed trading platforms, whether directly or indirectly. To comply, fund companies need to demonstrate a strong adherence to regulatory standards, including having at least one qualified team member with relevant experience in virtual asset or related product management. Additionally, the Financial Services and the Treasury Bureau of Hong Kong (FSTB) alongside the Hong Kong Monetary Authority (HKMA) jointly released a document seeking public input on proposed legislative measures concerning the regulation of stablecoin issuers. The suggested legislation establishes a licensing framework requiring eligible fiat stablecoin issuers to obtain a license from the HKMA, reflecting a significant move toward enriching regulatory structures and ensuring effective supervision in response to the changing stablecoin market.

This regulatory environment for cryptocurrencies demonstrates the government's proactive stance in fostering innovation within the financial industry. public consultation document Hong Kong Securities and Futures Commission

Strategic Focus of Hong Kong SFC for 2024 to 2026

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