Crypto Trading Ban Won’t Work, Says Hong Kong’s Top Financial Regulator
Carlson Tong Ka-shing believes Hong Kong needs a more robust regulatory framework for cryptocurrency trading. The soon-to-be former head of the Hong Kong Securities and Futures Commission (SFC) has called for greater emphasis on investor protection in the volatile virtual currency trading arena.
Blanket Cryptocurrency Trading Ban isn’t the Right Approach
Speaking to South China Morning Post, Tong declared that it would be futile to issue a blanket ban on cryptocurrency trading given the global nature of the venture. Commenting on the issue, the outgoing SFC chairperson said:
We do not think imposing a total ban on these platforms is necessarily the right approach, and it will not work in today’s internet world when trading can cross national boundaries. Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets.
Tong’s sentiments are at odds with the status quo in mainland China where the country has elected to crack down massively on cryptocurrency trading along with ICOs. For Tong, a more nuanced but robust regulatory framework would serve all parties best.
Tong is due to hand over as head of the SFC to Tim Lui Tim-leung on Friday (October 19, 2018). Earlier in the year, a report by Hong Kong’s Financial Services and Treasury Bureau (FSTB) issued a report that said cryptocurrencies weren’t a viable option for organized crime.
For Tong, an effective regulatory environment requires an extension of the SFC’s mandate to cover the emerging digital asset class. According to him, the regulatory watchdog’s purview only covers securities. This limitation isn’t unique to Hong Kong alone as other jurisdictions face similar issues of applying securities law to monitor and control digital asset trading.
Cryptocurrency Companies in Hong Kong Welcome Regulatory Scrutiny
Despite the SFC’s technical limitations, Tong believes it is important that Hong Kong works on a formalized regulatory framework for the cryptocurrency market. Speaking further, Tong noted:
We have to carefully consider the regulatory approach for these platforms because they are new technology and may not qualify as securities. We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue, while at the same time ensuring investors interest are being protected.
While Tong continues to sound the call for more regulations, operators in Hong Kong believe such a move would be beneficial to the legitimacy of their enterprises provided the laws do not hamper growth and development.
Angelina Kwan, COO of Bitmex, whose company recently moved into Hong Kong’s most expensive office building, called for the proposed regulations to keep pace with the current market landscape.
Do you agree with Tong’s comments regarding cryptocurrency regulations in Hong Kong? Let us know your thoughts in the comment section below.
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