Hong Kong financial markets' regulator said on Tuesday that the SAR government will introduce a new licensing system for cryptocurrency trading, effectively giving it the power to oversee all virtual assets trading platforms in the city.
The Chief Executive Officer of Securities and Futures Commission (SFC), Ashley Alder, said that platform operators need to apply for a licence with the SFC if they operate or target investors in Hong Kong in future.
"Later today, the government will propose a new licensing regime under the Anti-Money Laundering Ordinance for platforms which trade any type of crypto asset even if not classified as securities," Alder said at this year's Hong Kong Fintech Week.
"Once this new regime is in place, all virtual asset trading platforms in Hong Kong would be regulated, supervised and monitored under one of two regimes: the existing opt-in framework we introduced last year, or the proposed new licensing approach being announced today."
Alder said that although the regulator had brought in a set of rules last year to regulate cryptocurrency exchanges, they only apply to platforms that offer at least one virtual asset that falls under the legal definition of securities.
He added that another "significant limitation" of the existing regulating framework lies in its opt-in approach.
"So if a platform operator is really determined to remain completely off the regulatory radar, it can do so simply by ensuring that its traded crypto assets are not within the legal definition of a security," Alder said.