Hongkong recently joined the list of countries having regulations in place for cryptocurrency. The Hong Kong Securities and Exchanges Commission ( SFC) is keen on tightening crypto laws as cases of crypto- crime and money laundering increase across Southeast Asia.
Re-evaluating Cryptocurrency Laws
Hong Kong’s current stance on cryptocurrency is a stark contrast to the more hardline approach taken by mainland China. As Hong Kong is one of the world’s leading financial epicenters, the SFC is geared to reevaluate cryptocurrency laws, especially in terms of regulating the Initial Coin Offering (ICO) sector.
According to the SFC, if an investment fund has 10% or more of digital assets they will now need to obtain a license.Even then the companies will only be able to sell their products to professional investors.
The SFC want to set up a voluntary scheme where exchanges will be able to test their digital assets in what is being deemed a “temporary regulatory sandbox” and will then be able to decide whether they need to seek a license.
A Calculated Move
The Hong Kong SFC have been warning the industry for many months about their plans to impose tighter cryptocurrency laws. It is hardly surprising that Hong Kong is looking to tighten cryptocurrency laws as many major economies across the world are currently reevaluating their stance on crypto regulations.
Earlier this year in February, the SFC warned seven cryptocurrency exchanges in the wake of complaints made by investors. There are many pros and cons in tighter regulatory measures on the Hong Kong crypto industry. Although many consider it essential to safeguard investors and keep a lid on the industry, others believe that the new cryptocurrency laws could be costly and work against crypto firms in Hong Kong.
Daisuke Yasaku from Daiwa Institute of Research professional believes it might be a bad thing for Hong Kong when saying:
“The cost of regulations will be high. The requirements of the initiative may prove too burdensome for some operators.”