On June 1, the new regulatory framework for virtual assets in Hong Kong, "Guidelines for Virtual Asset Trading Platform Operators" , came into effect. The transition period lasts until June 1, 2024; if current operators apply to the Securities and Futures Commission within nine months after June 1, 2023, and confirm that they will comply with the regulatory provisions formulated by the Securities and Futures Commission, they can be considered to have obtained a license until the Securities and Futures Commission makes a decision on their license application.
It is important to note that the registration of exchanges is open today, and exchanges such as OKX and Gate have stated that they will apply for registration, but the regulatory body will still need some time to process applications for the transition period.
Which products can be traded?
Firstly, regulatory requirements emphasise that tradable tokens are only non-securities tokens with a minimum 12 month track record and that the token is already included in two cryptocurrency indices. According to market analysis, BTC, ETH, LTC, BCH, DOT, SOL, ADA, AVAX, MATIC, LINK is the most likely token to be included for retail trading. Secondly, the regulation prohibits exchanges from offering Earn products, lending and saving services. These types of services are very common in top exchanges. In addition, exchanges are prohibited from offering derivatives trading, such as perpetual contracts. However, the regulation acknowledges the importance of derivatives trading in the crypto market and says it will be further studied and considered.
Stablecoins are still banned
The Hong Kong Monetary Authority has issued a summary of the stablecoin discussion document in January 2023, and the regulatory arrangements for stablecoins are expected to be implemented in 2023/2024. Therefore, the Securities and Futures Commission stated that stablecoin and cryptocurrencies linked to other asset values should not be allowed to be traded for retail until the planned regulation of stablecoins is implemented.
Can people from other jurisdictions trade through Hong Kong platforms?
According to the provisions of the regulatory guidelines, platform operators must implement various measures (such as checking IP addresses and blocking access) to prevent people from jurisdictions that prohibit virtual asset trading from using their services.
