SFC to issue virtual asset trading license

The regulator has published a set of standards comparable to licensed securities and trading brokers.

The Securities and Futures Commission (SFC) announced that it plans to issue virtual asset trading platform licenses and plans to regulate them, according to a position paper published by the SFC.

In line with the announcement, the SFC has also published a set of regulatory standards “which are comparable to those applicable to licensed securities brokers and automated trading venues.”

SFC reportedly met with virtual asset trading operators to discuss SFC’s regulatory expectations and study the nature of the businesses of these operators.

“Having examined in depth the technical, operational and other aspects of virtual asset trading,
the SFC has concluded that some types of centralised platforms trading security and non-security tokens would be suitable to be regulated under the framework set out in this position paper,” SFC stated.

SFC however clarified that it has no power to grant a licence to or supervise a platform that only trades non-security virtual assets or tokens, as assets of this type are not “securities” or “futures contracts” under the Securities and Futures Ordinance.

Technology and digital asset company BC Group welcomed the announcement, calling it “a watershed moment for financial services in Asia and institutional adoption and trading of digital assets.”

“BC Group believes Hong Kong-based digital asset platforms will eventually be consolidated in favour of licensed players under this regime,” the company said in a press release.

“The clarity provided by this framework will drive demand for digital assets in Hong Kong. With licensing, regulated and institutional players will gain direct access and exposure to digital assets with the assurance of full regulatory oversight and protection,” they added.