Hong Kong’s top financial official said that the local government will soon publish a consultation on a proposed regulatory framework for over-the-counter crypto trading platforms as risks mount.
Christopher Hui, Secretary for Financial Services and the Treasury, wrote in a blog post published today that OTC venues are easily accessible to the general public, and some were found involved in fraud cases.
“In fact, OTC venues have played a certain role in some of the fraud cases involving some unlicensed VA trading platforms last year, having misled investors to channel funds to these unlicensed platforms,” Hui said. “Therefore, we believe that it is necessary to bring OTC venues under regulation, and we will launch a consultation very soon on the proposed regulatory framework.”
In June 2023, Hong Kong officially started its crypto licensing regime for virtual asset trading platforms, allowing licensed exchanges to offer retail trading services. Hong Kong has so far granted such licenses to two platforms — namely HashKey and OSL.
The regulators have given a transitional period for those already operating in Hong Kong before the licensing system came into effect and required them to submit license applications by Feb. 29.
Hui warned that as the deadline approaches, the Securities and Futures Commission is “preparing for enforcement work” and will step up publicity efforts.
Stablecoin consultation
In December, the Hong Kong Monetary Authority said in a joint consultation paper with the Financial Services and the Treasury Bureau that a stablecoin issuer would be required to obtain a license from the authorities “if it issues a stablecoin that references the value of one or more fiat currencies in Hong Kong.” The two-month consultation is set to end at the end of this month.
Hui said today that the HKMA plans to introduce a sandbox to explore stablecoin issuance with key industry players in the region.
Eddie Yue, chief executive of the HKMA, said in December that stablecoins could become the interface between traditional finance and the virtual asset market.
“In a scenario where stablecoins become one of the preferred payment options by the general public, we should reasonably expect further integration between the digital payment ecosystem and the real economy, and whether the stablecoin is indeed ‘stable’ will then become ever more important,” Yue added.
