Hong Kong’s Securities and Futures Commission (SFC) published a consultation paper on Monday, seeking public comments on its newly proposed regulatory regime for crypto trading platforms. The proposed rules state that virtual digital asset platform operators must obtain licenses to continue providing services or prepare for shutting down their businesses.

Hong Kong SFC Asks Several Questions, Seeking Public Feedback on the New Regime

The SFC unveiled its proposed regulatory regime for digital asset trading platforms on Monday, seeking public feedback from the local crypto community. The new regime, which is expected to come into force in June 2023, will require all Hong Kong-based crypto trading platforms to obtain a license from the regulators.

Under the newly proposed rules, crypto trading platforms that intend to apply for a license are advised “to review and revise their systems and controls to prepare for the new regime,” the SFC wrote in the 361-page document. This also applies to pre-existing platforms, the document noted.

“Those which do not plan to apply for a license should start preparing for an orderly closure of their business in Hong Kong.”

– the paper added.

In addition, the paper also outlined numerous other requirements that crypto exchanges and other crypto-related service providers must address. This includes many prerequisites such as safe custody of digital assets, cybersecurity, accounting, and auditing, Know Your Customer (KYC), anti-money laundering (AML), risk management, and so on.

Given that the consulting paper was published to ask for public feedback, the document brought up several questions. Among those asked is whether the public agrees that licensed platform operators should be allowed to provide their services to retail investors, assuming that the proposed investor protection solutions were sufficient.

The paper also asked the public what other requirements should be implemented to improve investor protection if the SFC decides to allow retail trading to licensed crypto exchanges, as well as what business model should be adopted to let platform operators offer crypto derivatives trading services.

Hong Kong Considering Allowing Retail Investors to Trade Major Cryptocurrencies

Perhaps the key aspect of the consultation process is whether to allow licensed digital asset exchanges to let retail investors trade major crypto tokens such as Bitcoin and Ether. If allowed, the move would mark a significant step for Hong Kong toward its ambitions to become a crypto and fintech hub.

The Hong Kong government said last year it plans to legalize crypto retail trading through a mandatory licensing program. However, the city’s financial regulator HKMA said last month that it will not allow algorithmic stablecoins and will require issuers to get a mandatory license.

Earlier this month, Hong Kong raised $102 million worth of digital green bonds. The sale marked the first tokenized green bond issued by a government, projecting the government’s forward-looking stance on blockchain and DLT.

This article originally appeared on The Tokenist

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.