Hong Kong Regulation "Might" Be Harmful for Crypto Industry

New regulations for crypto firms, which Hong Kong’s Securities and Futures Commission (SFC) had announced might keep crypto businessmen fro...

New regulations for crypto firms, which Hong Kong’s Securities and Futures Commission (SFC) had announced might keep crypto businessmen from penetrating the market.
Comments made by experts regarding the situation were made public by the Nikkei Asian Review.
Timothy Loh, owner of a local law firm, was quoted as saying that some entrepreneurs might not participate in the new framework to "maintain their current shares in the market."
“The requirements of the SFC initiative may prove too burdensome for some operators,” he said.
Other speakers talked to by Nikkei believe that higher trading costs could dissuade institutional investors from penetrating the market, which could work against the plans to stabilize markets. However, the counterargument is that a more stringent regulation may result in greater investor confidence, Nikkei cited.
The SFC first publicized the new regulatory framework in November. The guidelines likened cryptocurrency exchanges to current licensed providers of automated trading services, citing that they also need to safeguard investors.
In addition, the SFC has huge concerns about money-laundering cases and fraud, which has driven the regulator to launch new legislation. It will likely be implemented to exchanges, traders, investment funds and other crypto businesses.
Under the new regulations, investment funds are obliged to get a license from the SFC should more than 10 percent of their assets be comprised of Bitcoin (BTC) or other cryptocurrencies. In this case, they will be allowed to sell products only to professional investors.
Before applying for a license, crypto entrepreneurs can engage in a “regulatory sandbox” to test their solutions.
The new regulation also applies to initial coin offerings (ICO), the report indicated. For example, all tokens have to comply with SFC’s requirements and are obliged to have existed for at least 12 months before an ICO is launched.

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