Hong Kong Regulator to Introduce Advisory Panel for Licensed Crypto Trading Platforms

The Securities and Futures Commission of Hong Kong is set to establish a consultative panel for licensed cryptocurrency exchanges, as announced by Eric Yip, Executive Director of Intermediaries. Speaking at the Hong Kong Fintech Week on October 28, Yip stated that the panel will include representatives from each licensed exchange, fostering a transparent and collaborative environment among licensees. The expected outcome of the panel's deliberations is a comprehensive white paper outlining the development roadmap for virtual assets, including enhancements in compliance and risk management. This move is part of Hong Kong's efforts to create a comprehensive framework for digital assets, which will include upcoming legislation for over-the-counter trading and stablecoins. Earlier this year, Hong Kong introduced a new licensing regime for virtual asset trading platforms, with three currently licensed and 14 applications being processed, 11 of which have existing businesses in the city. Yip expects more licenses to be granted by the end of the year. However, he also emphasized the need for investor protection through regulation and education, as virtual assets are a priority for financial regulators worldwide. In the first half of the year, HK$1.5 billion was lost to investment fraud in Hong Kong, with fraud and scams accounting for nearly half of reported crimes. The SFC believes that the future of virtual assets lies in a regulated marketplace that balances development with investor protection. Yip called for greater cooperation between regulators globally to prevent exchanges from exploiting regulatory loopholes. Despite challenges, including some major exchanges dropping out of the licensing process, Yip stressed the importance of regulators staying adaptable to keep up with the market.