Chinese Securities Regulator Seeks to Tackle Unlicensed Crypto Trading in Hong KongSeptember 8, 2021
China Securities Regulatory Commission (CSRC) is planning to expand its regulatory oversight to include cryptocurrency, in a bid to clamp down on unlicensed crypto transactions and digital assets scams in Hong Kong.
Crypto Trading Regulation Necessary in Hong Kong
According to local news outlet Etnet on Tuesday (September 7, 2021), the deputy chief executive of the CSRC, Liang Fengyi, said that the regulatory agency could establish cryptocurrency regulations. The CSRC is the chief regulator of China’s securities market.
While the CSRC is responsible for creating policies and laws for the securities industry, the agency’s oversight does not extend to cryptocurrency. This is because crypto does not fall under securities and is not regarded as a payment method.
However, the rise of unlicensed cryptocurrency trading activities in Hong Kong is a concern for regulators. According to Fengyi, there has been an increase in scams involving digital tokens, which has led to investors losing their funds in fraudulent crypto-related investments.
Consequently, the CSRC believes that it is imperative to bring cryptocurrency under its regulatory ambit. According to Fengyi, licensing crypto activities could serve as a way to safeguard investors.
While the CSRC is looking to regulate cryptocurrency trading in Hong Kong, mainland China has long ago banned bitcoin and cryptocurrency trading. The CSRC deputy chief also noted that it was important to provide investors with more education on crypto asset investment.
Fengyi added that the securities regulatory agency “is continuously strengthening the supervision of over-the-counter derivatives, and will also launch a transaction data repository in the future.”
Hong Kong Aims to Protect Retail Crypto Investors
Back in November, the Hong Kong Securities and Futures Commission (SFC) said that it was planning to regulate cryptocurrency exchanges whether or not they list securities tokens. According to the SFC, the move would ensure that exchanges were not carrying out illegal practices while servicing Hong Kong users.
Hong Kong’s Financial Services and the Treasury Bureau also proposed to ban retail investors from trading cryptocurrency. Only Professional Investors who have a minimum of $1 million engage in crypto trading activities.
However, the proposal has seen pushback from some industry stakeholders, who believe that it could be counterproductive. The Global Digital Finance, a body representing major crypto exchanges like Huobi, Coinbase, OKCoin, and BitMEX, and the Bitcoin Association of Hong Kong spoke out against the proposal, with the former stating that the proposed ban could push investors to unregulated platforms.
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