As a seasoned analyst with extensive experience in the financial and cryptocurrency sectors, I find this development intriguing. The move towards joint oversight of over-the-counter crypto trading services by the Securities and Futures Commission (SFC) and the Customs and Excise Department (C&ED) in Hong Kong is a step in the right direction towards enhancing regulatory clarity and addressing gaps identified after the JPEX scandal.
Reports indicate that Hong Kong might incorporate their local securities authority into the process of granting licenses for over-the-counter cryptocurrency trading platforms.
In Hong Kong, it’s possible that over-the-counter cryptocurrency trading platforms could be supervised by both the Securities and Futures Commission and the Customs and Excise Department in the near future, as an effort to strengthen the region’s regulatory structure for these services.
As an analyst, I’ve gathered information from the South China Morning Post that indicates I’m delving into a potential over-the-counter (OTC) crypto services licensing system being considered by the Securities and Futures Commission (SFC). This initiative is being spearheaded in collaboration with the C&ED, as they aim to bridge regulatory loopholes exposed after the JPEX incident. The unfortunate fallout from this event amounted to losses exceeding $200 million.
Earlier, Over-The-Counter (OTC) services were governed solely by the C&ED, but there’s a growing trend towards joint regulation. The Securities and Futures Commission (SFC) is currently consulting industry stakeholders about the prospective new regulatory framework and is also assessing regulations for cryptocurrency custodian services. These discussions are preliminary and may still evolve, according to the sources.
Around mid-August, crypto.news announced findings from the SFC’s inspections of 11 cryptocurrency exchanges, which they deemed as potential license holders. The investigation uncovered issues such as excessive reliance on a limited number of executives for client asset management in certain exchanges, and inadequate protection against cyber threats in others.
The regulatory environment in Hong Kong is changing, with stricter licensing conditions for cryptocurrency exchanges and the advent of cryptocurrency exchange-traded funds. However, these developments have sparked concerns among local industry participants. Recently, Alessio Quaglini, co-founder and CEO of crypto custodian Hex Trust, expressed apprehension over proposed Over-the-Counter (OTC) regulations, fearing that rigorous conditions could push companies like Hex Trust to establish operations in more cryptocurrency-friendly locations.
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2024-09-13 13:36