Hong Kong introduces crypto staking rules, reaffirms Web3 commitment

2 months ago

Hong Kong’s Securities and Futures Commission (SFC) has introduced caller guidelines for crypto exchanges offering staking services.

In an April 7 announcement, the SFC announced caller guidelines for crypto exchanges offering staking services and locally authorized funds exposed to integer assets progressive successful staking. The announcement follows caller remarks from Christina Choi, the SFC’s enforcement manager of concern products, who said during a code astatine the Hong Kong Web3 Festival:

“The SFC is committed to supporting Hong Kong’s Web3 journey.”

In its announcement, the regulator said it “recognizes the imaginable benefits of staking successful enhancing the information of blockchain networks and allowing investors to gain yields.” Consequently, the latest guidance allows crypto exchanges to supply staking work offerings.

New rules for staking services

The caller rules were communicated by the regulator successful its latest circular sent to crypto exchanges nether its jurisdiction. The SFC requires crypto exchanges to get written support earlier offering staking services, clasp power implicit staked virtual assets and not delegate custody to 3rd parties.

Cryptocurrency exchanges engaged successful staking indispensable disclose each applicable risks and details concerning fees, minimum lock-up periods, unstaking processes, outage processes and custodial arrangements to their customers. Lastly, the providers indispensable study connected their staking activities to the SFC.

A akin circular was sent to SFC-regulated crypto money operators, with the caller rules being applicable to funds with much than 10% of their nett plus worth invested straight oregon indirectly successful integer assets. Funds tin lone get virtual assets that are besides straight disposable to the section nationalist and trust connected SFC-authorized platforms. Leveraged vulnerability is prohibited.

Funds tin prosecute successful staking if it is accordant with the fund’s objectives, portion providing wide disclosure and robust controls. An capitalist announcement and perchance shareholder support whitethorn beryllium required if staking implementation leads to worldly strategy oregon hazard illustration changes.

Hong Kong bets connected Web3

During her caller speech, SFC’s Choi recognized that the Web3 abstraction is inactive evolving and that “its afloat benefits volition unfold successful time, apt with twists and turns.” She cited the speculative manufacture of non-fungible tokens (NFTs) arsenic a cautionary communicative that justifies caution successful the existent regulatory approach:

“Therefore, alternatively than chasing each caller spark, we judge successful a pragmatic attack — strengthening the fundamentals and fostering a supportive ecosystem wherever Web3 tin thrive successful a sustainable manner.“

The official’s comments travel caller reports that cryptocurrency speech Bybit announced the shutdown of its NFT marketplace arsenic the marketplace is moving retired of steam. The determination follows a similar determination by large NFT marketplace X2Y2 announced successful precocious March.

The non-fungible token marketplace is seeing a important downturn. Daily NFT trading measurement was implicit $18 cardinal 364 days agone earlier Bybit’s announcements and stood astatine $5.34 cardinal erstwhile the determination to unopen down the level was made nationalist — a 70% fall.

When arguing wherefore Web3 companies should take Hong Kong arsenic their headquarters, Choi pointed retired that Hong Kong ranks 3rd successful the Global Financial Centres Index. Furthermore, section regulators person acceptable wide guidelines for crypto manufacture firms, and Hong Kong provides casual entree to Asian markets.

In her closing statements, Choi said, “We basal contiguous astatine the crossroads wherever accepted concern and the integer system are converging to thrust promising outcomes for our fiscal markets.” She added:

“The zero-to-one breakthrough has been made, and its aboriginal occurrence would precise overmuch beryllium connected however we nurture this convergence, that is, however we spell from 1 to 100.“

Her statements echo Hong Kong’s fiscal exertion sector, which has seen 250% maturation since 2022. The SFC precocious introduced a caller roadmap to presumption the metropolis arsenic a planetary cryptocurrency hub.

The “ASPIRe” roadmap hopes to future-proof the section virtual plus ecosystem. It involves 12 initiatives dispersed crossed 5 wide categories, which see providing marketplace access, optimizing compliance and frameworks and improving blockchain efficiency.

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