Hong Kong’s SFC Steps Up Data Regulation Amongst VATPs

• The SFC has stepped up its regulatory method in direction of data dissemination.
• SFC’s purpose is to bolster the knowledge dissemination process following latest considerations.
• Henceforth, VATPs need to adjust to newly launched measures within the publication of lists.

The Securities and Futures Fee (SFC) of Hong Kong has stepped up its regulatory method in direction of data dissemination and investor schooling on the Digital Belongings Buying and selling Platforms (VATPs). In a latest publication, the impartial regulator mentioned the newest step would reinforce the knowledge dissemination process following some lately recognized considerations.

The SFC acknowledged the potential advantages that the expertise behind digital finance and digital property can carry to the monetary markets. Nevertheless, the regulatory physique additionally recognized the dangers of decentralization, cash laundering, investor safety points, and different vices related to digital property (VAs) and associated actions.

In response to the regulator, VA buying and selling is integral to the Web3 ecosystem. It famous that the dangers it has recognized are in keeping with the newest worldwide consensus amongst monetary regulators. The SFC’s publication affirmed that underneath the Anti-Cash Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO) that got here into full impact on June 1, 2023, the hole within the SFC’s licensing and supervision powers over VATPs has been closed by way of the brand new licensing regime for centralized VATPs.

Guaranteeing suitability within the onboarding course of, enhanced token due diligence, admission standards, and disclosures are some areas the place the SFC has stepped up supervision. It has imposed stringent necessities in these areas to permit SFC-licensed VATPs to serve retail traders.

Henceforth, the SFC has mandated all VATPs working inside its jurisdiction to adjust to some newly launched measures concerning the publication of VATP lists. They’re to make sure that data is disseminated in a transparent, clear, and well timed method. The SFC has additionally determined to reinforce and subject a devoted checklist of suspicious VATPs, which is well accessible and distinguished on the SFC’s web site. 

Different steps by the regulator underneath the brand new adjustment embrace collaborating with the Investor and Monetary Training Council (IFEC) in launching a public marketing campaign to lift consciousness in opposition to fraud and enhance its intelligence-gathering course of regarding companies round VAs.