2 years ago
Hong Kong Securities and Futures Commission (SFC) has stated that retail traders volition not beryllium allowed to commercialized stablecoins pending caller regulatory arrangements for these assets.
According to the SFC’s concluded a consultation insubstantial connected regulating virtual plus trading platforms by claiming that determination is simply a request to absorption connected the risks of stablecoin and its regulations.
The SFC claimed that its reasoning was based connected the request to guarantee that stablecoin reserves are appropriately managed for terms stableness and that investors tin workout redemption rights. It added that if these risks are not adequately managed, they airs “fundamental implications for the stableness of a stablecoin.”
The regulator highlighted the Hong Kong Monetary Authority’s (HKMA) treatment insubstantial connected stablecoins which required stablecoin issuers to beryllium licensed and curtailed the proliferation of algorithmic stablecoins.
“A stablecoin which is incapable to support its peg oregon instrumentality an investor’s funds upon redemption cannot beryllium said to beryllium stable. In addition, heightened vulnerability to runs greatly affects their liquidity and renders them mostly unsuitable for retail investors.”
Meanwhile, SFC noted that a caller regulatory regime is expected to beryllium implemented for stablecoins earlier the extremity of adjacent year.
Retail entree to crypto trading
While retailers would not beryllium allowed to commercialized stablecoins, the SFC would let licensed trading level operators to service retail investors with non-security tokens with astatine slightest 12 months of nary atrocious records.
The SFC said it would instrumentality robust measures to support these investors, including ensuring suitability successful the onboarding process, bully governance, enhanced token owed diligence, admittance criteria, and disclosures.
SFC CEO Julia Leung said:
“Hong Kong’s broad virtual assets regulatory model follows the rule of ‘same business, aforesaid risks, aforesaid rules’ and aims to supply robust capitalist extortion and negociate cardinal risks. This volition alteration the manufacture to make sustainably and enactment innovation.”
No lending, borrowing services
Meanwhile, virtual assets trading platforms licensed by the SFC cannot supply customers services specified arsenic earning, deposit-taking, lending, and borrowing.
According to the fiscal regulator, the superior relation of a licensed level is “to enactment arsenic an cause and supply an avenue for the matching of orders betwixt clients.” SFC added:
“Any different activities whitethorn pb to imaginable conflicts of involvement and necessitate further safeguards. As such, licensed VA trading platforms volition not beryllium allowed to behaviour these activities astatine this stage.”
Additionally, these platforms cannot supply their clients with algorithmic trading services.
The SFC besides said licensed platforms indispensable clasp astir of their lawsuit virtual assets successful acold retention to mitigate against hacking and different cybersecurity risks.
The station Hong Kong volition not let retail customers to commercialized stablecoins appeared archetypal connected CryptoSlate.
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