The outgoing chairman of the Hong Kong Securities and Futures Commission (SFC), Carlson Tong, ruled out the possibility of banning the bitcoin exchanges, as the Chinese authorities had previously done.
At the moment, the Hong Kong authorities are preparing for the introduction of rules for regulating cryptocurrency business in the country, and as the head of the SFC said, the ban on exchanges and other trading platforms would not be the right approach.
“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,” said Tong, who is due to hand over the SFC’s reins to Tim Lui Tim-leung on October 19.
The SFC Chairman noted that the regulatory framework for regulating the operation of cryptocurrency exchanges is absolutely necessary, adding that such platforms work with new technologies and therefore the rules of the traditional financial market, especially in the context of securities offerings, cannot be applied to them.
“But no other international market currently has a comprehensive regulatory framework for these cryptocurrency platforms. 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,” said Carlson Tong for Suth China Morning Post.
The publication also notes that the exchanges operating in Hong Kong have already welcomed this approach by the head of the SFC. So, BitMEX Chief Operating Officer, Angelina Kwan said that proper regulation will help shape a new industry.
“We hope the guidelines or regulations being considered will keep pace with market developments. The US has introduced regulations over cryptocurrency and there are futures products being traded by the CME Group and the CBOT. This shows that a regulatory authority can help to develop a new industry. We hope that by sharing information about cryptocurrency markets and market developments in this space will help international regulators better understand cryptocurrency as an asset class,” she said.
In turn, Jeremy Allaire, Circle CEO, said that the company is ready for proactive cooperation with the Hong Kong government in addressing these issues.
Earlier this year, the SFC warned investors about the risks that may arise from the initial coin offering (ICO), noting that many of them are outright fraud.