[NEWS] Hong Kong to implement new cryptocurrency regulations from June 1st

Hong Kong's Securities and Futures Commission (SFC) completed discussions on the regulatory requirements for cryptocurrency exchanges on the 23rd and announced the results.

As a result, new cryptocurrency regulations will come into effect on June 1st as originally scheduled.

The new cryptocurrency regulations will introduce a licensing system to protect retail investors. In the consultation on the regulations, which was conducted until the end of March, the overwhelming majority of voices were in favor of licensed cryptocurrency exchanges providing services to retail investors.

In addition, the new regulations will strengthen due diligence of tokens in addition to governance, admission criteria and disclosure, and will take more robust measures to protect retail investors.

In particular, the due diligence of tokens will require at least two providers to create an index and allow trading of independent cryptocurrencies. In addition, the size of the market capitalization will also be included in the conditions, and liquidity will need to be confirmed.

He also mentioned stablecoins as "cryptocurrencies that are not suitable for retail investors." The SFC decided that trading should not be allowed at this time, stating that stablecoins should not be allowed until stablecoin regulations, which are expected to be implemented between 2023 and 2024, are in place.

The SFC cited the risk that the price of stablecoins may diverge from the underlying assets, and that investors may not be able to be refunded at the time of redemption.

Cryptocurrency exchanges and other operators will be required to manage assets using cold wallets and to segregate customer assets.

Guidelines for cryptocurrency exchange operators and guidelines for anti-money laundering and anti-terrorist financing, which summarize these rules, will be published on the 25th.

Hong Kong has publicly stated its aim to become a cryptocurrency hub since last year, and has shown a strong commitment to doing so. Several reports have already shown that Hong Kong is the country/region with the most advanced cryptocurrency environment in the world and is the most suitable for its spread.

Reference: Announcement, consultation results
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