Introduction

On April 11th, at the “Policy and Industry Practice” Summit Forum of the Hong Kong Web3.0 Association, Zhao Jiali, former director of the Financial Technology Group of the Hong Kong Securities Regulatory Commission, stated that Hong Kong regulatory agencies had been aware of the need to regulate virtual assets to develop financial technology as early as the 2017 ICO wave. In 2018, while the UK and the US were still thinking, Hong Kong began to construct a virtual asset regulatory framework, although initially it was a tightening policy, But currently, policies are slowly being relaxed and further accepting virtual assets.

Former Director of the Financial Technology Group of the Hong Kong Securities Regulatory Commission: Hong Kong regulatory authorities have been interested in regulating virtual assets since 2017

Virtual assets have become a popular topic in the world of finance and investment. Many regulatory agencies are grappling with how to regulate these assets to promote financial technology innovation while preventing illicit activities. Hong Kong’s regulatory agencies are one of these agencies, and in this article, we will delve into their journey towards regulating virtual assets. At the “Policy and Industry Practice” Summit Forum of the Hong Kong Web3.0 Association, Zhao Jiali, former director of the Financial Technology Group of the Hong Kong Securities Regulatory Commission, made some revelations on the regulatory framework for virtual assets in Hong Kong.
# Background
In 2017, the Initial Coin Offering (ICO) wave swept across the financial market, causing a lot of excitement and attracting many investors. However, this excitement was short-lived as many fraudsters took advantage of this opportunity to raise money through fraudulent ICO projects. This prompted many regulatory agencies to take action and regulate virtual assets to prevent such activities from happening again. Hong Kong regulatory agencies were among the first to recognize the need for regulation.
# Early Regulation Efforts
At the peak of the ICO wave in 2017, Hong Kong’s Securities and Futures Commission (SFC) issued a statement warning investors of the risks involved in ICOs. The commission also stated that ICOs would be subject to the securities laws of Hong Kong, and any person engaged in activities related to ICOs must be licensed or registered with the SFC. This was a significant move towards regulation of virtual assets in Hong Kong.
# Construction of Virtual Asset Regulatory Framework
In 2018, while the UK and the US were still contemplating how to regulate virtual assets, Hong Kong began constructing a virtual asset regulatory framework. The SFC set up a new regulatory framework that required all virtual asset trading platforms operating in Hong Kong to be licensed or registered under the new framework. The framework, which came into effect in November 2018, aimed to regulate the activities of virtual asset trading platforms operating in Hong Kong.
# Tightening of Regulatory Policy
Initially, the virtual asset regulatory policies in Hong Kong were quite tight, and many virtual asset trading platforms found it challenging to operate under the new regulations. The regulations required trading platforms to follow strict rules on anti-money laundering and terrorist financing. This led to some virtual asset trading platforms moving to other regions with less stringent regulations.
# Relaxation of Regulatory Policies
Over time, the regulatory policies on virtual assets in Hong Kong have become more relaxed, and there is now room for growth in this sector. In February 2019, the SFC released further guidelines for virtual asset trading platforms, setting out requirements for the custody of virtual assets. In 2020, Hong Kong’s Securities and Futures Commission updated its regulatory guidance on virtual asset trading, offering new rules expected to make it easier for companies to raise money through security token offerings.
# Conclusion
The journey towards regulating virtual assets in Hong Kong began early, with the regulatory agency recognizing the need for regulation during the 2017 ICO wave. The initial steps taken were quite stringent, but over time, the regulatory policies have become more relaxed, allowing for more virtual asset trading platforms to operate in Hong Kong. This is a positive step towards promoting the use of virtual assets and financial technology innovation in the region.
# FAQs
1. What is Hong Kong’s current regulatory framework for virtual assets?
– Hong Kong’s current regulatory framework requires all virtual asset trading platforms operating in the region to be licensed or registered under the new framework.
2. When did the regulatory agency in Hong Kong begin the journey towards regulating virtual assets?
– The journey towards regulating virtual assets in Hong Kong began during the 2017 ICO wave.
3. Are there any guidelines for virtual asset trading platforms in Hong Kong?
– The Securities and Futures Commission in Hong Kong released further guidelines for virtual asset trading platforms in February 2019, offering new rules expected to make it easier for companies to raise money through security token offerings.
# Keywords
1. Hong Kong
2. Virtual Assets
3. Regulatory Policies