The Hong Kong securities regulator, the Securities and Futures Commission (SFC), has presented new guidelines that would allow approved exchanges and cryptography funds to provide clearing services in the city.
Stimulation offers crypto holders a way to put their digital assets at work and earn passive income without selling them. The development is an integral part of the proof of stake (POS) because it ensures security and immutability.
In a press release on Monday, the Securities and Futures Commission (SFC) recognized that the thread of the double role can play, improving the security of the blockchain network and offering regulated performance generation opportunities for investors, while it continues to implement its wider growth strategy of the Hong Kong digital asset sector through its “aspire” roadmap.
“The expansion of the suite of regulated services and products is crucial to maintain the healthy progress of the Hong Kong virtual asset ecosystem,” Julia Leung, chief executive officer of SFC, in a statement. “But the expansion must be carried out in a regulated environment where the safety of virtual assets of the customer continues to be in the center and the center.”
In a circular explaining the rules concerning intention, the SFC said that virtual asset trading platforms (VATP), which the regulator calls approved exchanges, must maintain the complete control of customer assets, explicitly prohibiting the outsourcing of the feat of a third party.
Platforms will also be necessary to transparently disclose all associated risks, including potential vulnerabilities such as blockchain errors, hacking or inactivity of the validator.
VATPs, according to the rules, must clearly inform customers of the processes involved, costs, minimum locking durations and provisions for the continuity of activities during disturbances.
The funds of the authorized virtual assets, on the other hand, are mandated not to set up only via approved platforms or authorized institutions, with a forced ceiling to manage the risks of liquidity, further emphasizing the prudent but favorable approach to the regulator.
This contrasts with Singapore, the Hong Kong rival financial center in the region, which prohibited the milestone in retail in 2023, citing the need for “investor protection”.
The American Securities and Exchange (SEC) commission continues to restrict the implementation of application measures, although it is confronted with growing calls from a bipartite group of senators to mitigate its position.
Meanwhile, several states, most recently, the Illinois, abandoned prosecution against Coinbase, which was struck for the first time with several proceedings in 2023.
