The statement was made by the chairman of the SFC, when speaking to a local newspaper.
While waiting to pass on the position to Tim Lui Tim-Leung, the SFC chairman Tong Ka-Shing revealed that the watchdog isn’t considering banning cryptocurrency platforms. The chairman further added that, unlike Mainland China, the authority believes that a total ban is not the right move.
The chairman said that a total ban wouldn’t work in today’s market, given that trading can cross national boundaries through the internet. That’s keeping in mind that transactions can easily take place through international markets located overseas, in case of a ban.
The watchdog’s official added that a regulatory framework to monitor crypto exchanges is necessary. Chairman Ka-Shing further noted that the SFC is carefully considering the approach since such platforms involve new technologies that can’t be treated as securities. Tong also proposed equating them to traders, though they don’t fall under SFC’s current requirements.
In his statement, Tong said that crypto platforms could be monitored to a standard, similar to a licensed trading venue that protects the investors’ interest.
According to a report published in the South China Morning Post, the exchanges working in Hong Kong have already supported the move. For instance, the Chief Operating Officer of BitMEX, Angela Kwan, said that the regulatory authority would usher in a new industry. CEO of Circle, Jeremy Allaire, also welcomed the proposal, saying that the company will collaborate with the government to help develop those frameworks.
The SFC has now warned the public of the potential dangers of ICOs (Initial coin Offerings) at least twice. In September last year, the authority issued a public warning on the risks of cryptocurrency investment, stressing that ICOs may be treated as securities. Earlier this year, they issued a second warning reminding the public of the potential risks that ICOs may pose, urging investors to do a lot of research and due diligence before committing their money.
According to the SFC’s annual report released in July, the authority is keeping a close eye on ICOs and crypto assets, waiting to intervene at the appropriate moment.