Hong Kong is changing its laws in relation to crypto-assets regulation in the region.
Ashley Alder, chief executive of HK’s Securities and Futures Commissions (SFC), commented that “under the current legislative framework, if a platform operator is really determined to operate completely off the regulatory radar it can do so simply by ensuring that its traded crypto assets are not within the legal definition of a security” . This approach was largely regarded as an “opt-out” or “opt-in” decision for digital asset trading firms on whether to be regulated or not. The legislation to opt in to be regulated and licensed was passed in November 2019, with the SFC’s Position Paper outlining the requirements needed for a firm to apply for a license, including regulatory concerns such as the security of assets, KYC requirements, AML and more .
A year later (November 2020), the Hong Kong government is seeking to change this by requesting that under the new anti-money laundering legislation, all cryptocurrency trading firms in the region become regulated. An SFC license will become a prerequisite for the dozens of cryptocurrency exchanges already operating in that market, not to mention the ones looking to set up digital asset trading companies there. Hong Kong will thus join other financial centers in Asia, such as Japan and Singapore, that also require digital asset trading firms to be regulated .
Scalable Solutions, a leading technology provider of white label digital asset exchanges and tokenization services has extensive experience in helping companies launch new trading platforms or scale existing ones. As a global provider, we have dealt with regulatory requirements across a multitude of jurisdictions. Our team has the knowledge to guide cryptocurrency trading platforms, including the ones in Hong Kong, to fulfilling the necessary conditions to operate in a regulated manner. Get in touch to find out more here.
 “Hong Kong Wants Cryptocurrency Trading Platforms to Be Regulated – SFC.” Reuters, Thomson Reuters, 3 Nov. 2020, www.reuters.com/article/us-crypto-currencies-hongkong-reulator/hong-kong-will-require-all-cryptocurrency-trading-platforms-to-be-regulated-sfc-idUSKBN27J07N.
 “Position Paper: Regulation of Virtual Asset Trading Platforms.” Securities and Futures Commission Hong Kong, 6 Nov. 2019, sfc.hk/web/files/ER/PDF/20191106%20Position%20Paper%20and%20Appendix%201%20to%20Position%20Paper%20(Eng).pdf.
“Hong Kong Now Offers Opt-In Regulation for Crypto Exchanges: Regulation Bitcoin News.” Bitcoin News, 24 Dec. 2019, news.bitcoin.com/hong-kong-now-offers-opt-in-regulation-to-crypto-exchanges/.
Sinclair, Sebastian. “Hong Kong’s Securities Watchdog May Soon Regulate All Crypto Trading Platforms.” CoinDesk, CoinDesk, 3 Nov. 2020, www.coindesk.com/hong-kongs-securities-watchdog-may-soon-regulate-all-crypto-trading-platforms.