The outgoing chairman of the Hong Kong Securities and Futures Commission (SFC) has ruled out a total ban on cryptocurrency exchanges in the country. He believes the ban is unnecessary and he is suggesting formal regulation instead.
Plans To Regulate Crypto Trading In The Country
Residents of Hong Kong have shown a growing appetite for cryptocurrencies, and it’s this reason that is pushing the SFC to come up with regulation for the sector.
While speaking to the South China Morning Post on Monday, Carlson Tong Ka-shing, the outgoing chairman of the SFC insisted that Hong Kong will not follow China by issuing an outright ban on the crypto sector.
“We do not think imposing a total ban on these platforms is necessarily the right approach.”
His reasoning is based on the belief that traders will always find ways to circumvent any barriers.
He adds that even if the agency were to go ahead and ban cryptocurrency activity in the city, traders would still be able to conduct trades using platforms that are based overseas.
Instead, the SFC will focus on developing a formal regulatory framework for domestic cryptocurrency trading. They will pursue this direction even if the sector may fall beyond their territory as the authority’s influence only covers securities.
Tong stresses that under the SFC’s Securities and Futures Ordinance, crypto trading doesn’t fall within the custodian, audit or valuation requirements. It means they do not qualify as securities. For this reason, he is suggesting a careful regulatory approach that will help oversee cryptocurrency trading platforms.
“We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue, while at the same time ensuring investors interest are being protected.”
Now, domestic exchange operators in Hong Kong seem to be very open to the suggestion. According to the report, BitMEX and Circle, two platforms that conduct their operations in the city are said to be looking forward to the regulations encouragingly.
Despite these positive recommendations from the outgoing chairman, it will be interesting to see the approach the agency will take. Earlier this year, the authority shut down an ICO citing “potential unauthorized promotional activities and unlicensed regulated activities.”
Basil has three years of freelance experience writing on disruptive technologies. He focuses on breaking news and education pieces; helping to spread the gospel of Blockchain. He hopes to have his own blockchain company one day; helping the world through its innovative ledger technology.