Hong Kong’s crypto rules set a high bar for ‘good reason,’ says SFC advisor

Hong Kong’s Virtual Asset Service Provider (VASP) Standards Set “Incredibly High” As Securities And Futures Commission (SFC) Wants Crypto Industry To Match The Same Compliance Standards As Traditional Financial Firms It has been.

Speaking to Cointelegraph at the Hong Kong WOW Summit, Lucy Guzmarian, founder of crypto venture firm Tokenbay Capital and member of the SFC Fintech Advisory Group, said, “We set the bar high. “There are good reasons,” he said. “

“Because the standards are incredibly high, [the SFCs] Ask VASPs to apply the same standards that incumbent financial institutions, such as large banks and large asset managers, must adhere to. “

On February 20, the SFC issued a consultation paper to consider whether licensed VASPs are required to serve retail investors and what level of investor protection measures should be imposed. .

Anti-Money Laundering (AML) and Know Your Customer (KYC) policies were also discussed.

Gazmararian said these high standards could pose challenges to Hong Kong’s cryptocurrency industry in the short term.

“The problem is that cryptocurrency businesses are often in the startup stage,” she explained. “Many have funds, but not huge amounts, not hundreds of millions.”

“Complying with the framework comes at a significant cost,” she added, citing the need for local VASPs to have insurance, independent assessment reports, and to keep crypto in cold storage.

“If you are a start-up cryptocurrency company, you are being criticized for how do you get started? Is that going to stifle the industry?”

With a robust regulatory framework in place, Gazmararian believes more well-capitalized financial institutions will be more than happy to help a promising start-up get off the ground.

“I think the bar is set high because the companies that get the licenses are going to have the strictest standards, and I think that’s for good reason,” said Gazmararian.

“Cryptocurrency platforms are part of the overall Web 3.0 ecosystem and strongly support the development of the entire Internet ecosystem.

— ivanferrari.eth.zk (@ferrarivarese) April 3, 2023

The SFC encouraged individuals, businesses and cryptocurrency companies to review the 361-page consultation paper and provide feedback.

Securities regulators want these bodies to share their views and point out things they may be overlooking because they are “absolutely focused” on doing everything right. , explained Gazmararian.

Feedback on the consultation paper was closed on March 31st.

Related: US crackdown pushes crypto ‘center of gravity’ to Hong Kong: Kaiko CEO

Over the past few months, Hong Kong has laid considerable groundwork to establish itself as the world’s next crypto hub.

More than 80 digital asset firms have expressed interest in establishing a presence in Hong Kong over the past few months, according to a March 20 statement from Financial Services Commissioner Christian Hui and the Ministry of Finance.

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