The SFC introduced a licensing system for virtual asset trading platforms about a year ago, but there is a one-year transition period, which ends at the end of this month. According to the SFC website, as of last night, the SFC has issued licenses to two virtual asset trading platforms, 1 platforms are in the process of applying, and 1 other license applications have been returned, rejected or withdrawn. Overall, Hong Kong has received a positive response from the market in opening up a "new track" for virtual asset trading. The Treasury Bureau also issued a statement last night stating that the market is optimistic about Hong Kong's potential in the field of virtual asset trading.
Before the licensing system comes into effect, platforms already operating in Hong Kong have a one-year transition period to consider submitting a license application to the SFC. The application period for the transition period ended on February 1. The SFC issued a statement yesterday, stating that after June 2, all virtual asset trading platforms operating in Hong Kong must be licensed by the SFC or be virtual asset trading platform applicants who are "deemed to be licensed". Once violated, the SFC will take all appropriate actions against any illegal acts.
"Deemed to be licensed" is not a formal license
After June 6 this year, the development of virtual asset trading will enter another new stage. If the SFC believes that these applicants can meet the basic licensing and regulatory requirements and have substantial operations in Hong Kong before the licensing system takes effect, they will temporarily not treat these existing platforms as unlicensed operations according to the law from June 1 this year, allowing them to continue to provide services to existing customers under supervision. However, citizens and investors must note that the SFC has not yet officially licensed these platforms.
Platforms that have not submitted their license applications by the February 2 deadline must end their operations in Hong Kong by May 29 this year. Investors should close their accounts with these platforms as soon as possible.
The CSRC will process all platform applications as soon as possible
The SFC pointed out that it will strengthen advertising and continue to remind investors that they should only trade virtual assets on platforms officially licensed by the SFC. At the same time, the government will maintain close communication with the SFC to allow the SFC to process all platform applications as soon as possible, so that citizens and investors have more secure investment options. Looking ahead, Hong Kong will further improve the regulatory framework, including regulating virtual asset over-the-counter service providers, to build a stable ecosystem for the virtual asset industry and promote its responsible and sustainable development.
The SFC emphasized yesterday that although those virtual asset trading platforms that are "deemed to be licensed" have promised to strengthen their policies, procedures, systems and control measures to comply with the SFC's regulatory requirements, they still need to demonstrate the actual implementation and effectiveness of these measures to satisfy the SFC. Before these platforms are officially licensed, the SFC does not expect them to actively promote their services or establish business relationships with new retail customers.
Hong Kong stocks hit 19000 points as trading volume shrunk
As for Hong Kong stocks, the market fluctuated within a narrow range yesterday. The Hang Seng Index rebounded to 19,000 points at one point, but was weak again in the late trading. The Hang Seng Index closed at 18,821 points for the day, down 6 points. The turnover shrank to 977 billion yuan, the lowest in more than a month.
The tech-sector index closed down 9 points at 3,854 points. Online healthcare stocks were sought after. Alibaba Health (0241) saw its share price surge 10.1% on the back of its promising performance, becoming the blue chip and tech-sector index stock with the largest increase. This also drove Ping An Good Doctor (1833) up 3.1% and JD Health (6618) up 2.3%.
CSPC Pharmaceutical (1093) saw a 13% increase in first quarter net profit and Nomura and others raised their target price, rising another 2% throughout the day. Other technology stocks had individual developments. Tencent (0700)'s major South African shareholder planned to reduce its holdings again, but Tencent still fluctuated and rose 0.7%. Meituan (3690) also rose 0.3%, Alibaba (9988) rose 0.4%, but JD.com (9618) fell 0.4%.
In addition, oil stocks rose against the market trend, with PetroChina (0857) rising 2.1%, CNOOC (0883) rising 0.7%, and shipping stock China Overseas Land & Investment (0316) rising another 4.6%, setting a new one-year high.
Summary of the SFC's regulation of licensed platform operations
◆After June 6, only virtual asset trading platforms that have been licensed by the Securities and Futures Commission, or deemed to have been licensed, can operate in Hong Kong. Otherwise, it will be illegal.
◆Investors should close accounts opened on unlicensed trading platforms as soon as possible
◆ For virtual asset trading platforms that are deemed to be licensed, the SFC does not expect them to actively promote their services or establish business relationships with new retail customers before they are officially licensed
◆All virtual asset trading platforms and their ultimate owners must comply with all applicable laws and regulations, including but not limited to preventing mainland residents from using any of their virtual asset-related services
◆ The "deemed licensed" arrangement aims to balance investor protection and market development. The arrangement is only temporary. If any violation is found, the SFC will promptly reject the license application of the "deemed licensed" applicant.
◆In the coming months, the SFC will conduct on-site inspections of virtual asset trading platforms that are deemed to be licensed to determine whether they comply with regulatory requirements, with a particular focus on their customer asset protection and “know your customer” procedures
Hong Kong's virtual assets development enters a new stage
Progress since the publication of the Policy Statement on the Development of Virtual Assets in Hong Kong on October 2022, 10
1. Virtual asset related products
Virtual asset futures ETFs and virtual asset spot ETFs have been listed in Hong Kong. This is the first batch of virtual asset spot ETF markets in Asia, and the Ethereum spot ETF listed in Hong Kong is the first in the world.
2. Tokenized assets
Issued the world’s first tokenized government green bonds, the world’s first multi-currency tokenized bonds, and the first digital native bonds issued in Hong Kong
3. Stablecoins
Public consultation on legislative proposals for regulating fiat stablecoin issuers and launch of a “sandbox” for stablecoin issuers
4. Digital Hong Kong Dollar
The second phase of the Digital Hong Kong Dollar pilot project has been launched to further explore the innovative use cases of the Digital Hong Kong Dollar in Hong Kong and its three characteristics (programmability, tokenization and instant settlement)
Source: Treasury Bureau