Hong Kong Intends to Enforce Rigid Rules on Cryptocurrency Market

Last Modified:12 May 2020 14:45:57
Hong Kong Intends to Enforce Rigid Rules on Cryptocurrency Market

Presently, there are greatest numbers of cryptocurrency trade and exchange rules in Asia. Hong Kong is the last Asian country which has recently joined to legalized ones in this region. Securities and Futures Commission, SFC, as the administrator organization, wants to avoid crimes in the area of cryptocurrencies and laundry through rules reformation. The current condition of Hong Kong regarding cryptocurrency rules is weaker than that of other countries like China. Considering the fact that Hong Kong is one of the important countries in the financial realm, SFC intends to reevaluate cryptocurrency rules concentrating on ICO (Initial Coin Offering). In these new reforms, the activities in cryptocurrency will be done under the supervision of SFC. This organization undertakes the responsibility of protecting investors and helping Hong Kong improvement as a global financial center. According to new reforms, in case of investment value is more than 10% of total asset, there should be a necessary license issued by this organization.

Further, selling such goods (cryptocurrency and its associated goods) is just permitted to professional investors. From now on, active companies in ICO will have activity license if they fulfill the requirements proposed by SFC. For instance, 12 months should have passed from the Token Sale. Committed crimes in recent months have made these organizations more determined to regulate cryptocurrency market. In February of this year, SFC warned seven cryptocurrency conversion companies because of their users’ complaint. These warnings were because the companies have made the barrier to withdraw currency form users’ account. In March, too, an ICO was stopped due to reported trespasses. SFC is going to launch a virtual environment called Sandbox to exchange cryptocurrencies to make market investigation and evaluation possible for the applicants before entering the market.

In the experts’ belief, Hong Kong, as a financial center connected to China, has took a good method; however, the cost of such rules will be high. Depending on infrastructures design, each exchange needs repeated reports to the responsible references and meticulous examination. High charges of investment resulting from these reforms can discourage investors to enter the market. From the other hand, those with opponent views believe that such rules implementation would cause more certainty in working in this market in the long run and paves the way for the investors to get in. Will implementation of such rigid rules be useful or harmful for the native industry? the answer will be understood in the future.