Introduction
In a significant move to adapt to the evolving landscape of digital finance, the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) released a supplementary circular on September 30. This circular introduces revised guidelines aimed at intermediaries engaged in virtual asset operations, responding to both market changes and input from industry participants.
Key Updates
Among the noteworthy updates is the allowance for intermediaries to provide staking services, which must be executed via licensed platforms and independent accounts, ensuring proper risk disclosures are made to clients prior to any engagement. Additionally, licensed entities are now authorized to facilitate off-platform trading through these regulated platforms, enhancing the flexibility of trading options available to investors.
Clarifications on Virtual Asset Activities
Importantly, the circular makes it clear that activities undertaken by clients who utilize virtual assets for subscribing to or redeeming investment products, as well as those who leverage physical assets for similar transactions with virtual asset funds, will not classify as virtual asset trading services. This provision helps delineate the boundaries concerning operational definitions in the virtual asset sector.
Regulatory Obligations
Furthermore, intermediaries are obligated to keep their clients informed and in compliance with certain regulations, including anti-money laundering laws. They are also required to confirm that their clients possess adequate net assets and furnish risk disclosures relating to virtual asset futures contracts. However, it should be noted that these stipulations are not mandated for institutional professional investors or qualified corporate professional investors.
Conclusion
This circular marks a proactive step by the Hong Kong regulatory bodies to create a clearer framework for virtual asset activities amidst the dynamic nature of the financial technology landscape.
