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A public consultation is being requested by the Hong Kong Securities and Futures Commission on proposals to let authorized cryptocurrency exchanges to provide services to retail investors.
The newly proposed licensing scheme for cryptocurrency exchanges, which would go into effect in June 2023, is being solicited for public comment by the Hong Kong Securities and Futures Commission (SFC).
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The SFC made the proposal that all centralized cryptocurrency trading platforms operating in Hong Kong should be licensed with a regulatory agency and announced the consultation process on February 20.
The SFC's proposed regulatory rules have been modified to reflect some of the existing qualifications for licensed securities brokers and automated trading venues.
Each individual or company that offers services related to cryptocurrencies is required to apply for a license from SFC, according to the notice. Many specifications are also made for bitcoin exchanges and service providers.
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A list of authorized cryptocurrency exchanges and service providers will also be published and maintained by SFC Hong Kong in order to inform the public about the registration status of various businesses.
Only two trading platforms are now authorized by SFO, according to SFC, despite the fact that SFC has implemented a regulation specific to cryptocurrencies that has made it easier for staged retail investments to reduce exposure to bitcoin assets.
Retail investors now have indirect access to these markets through regulated products thanks to a regime for funds traded on cryptocurrency futures exchanges that the SFC approved in October 2022.
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A number of authorized brokers and investment managers have begun to provide investors with services linked to cryptocurrencies while being regulated by the SFC. This has been yet another important factor in the SFC's decision to open up access to cryptocurrencies for all kinds of investors starting in June 2023 via approved platforms.
Reviewing and revising current systems and controls to conform to the demands of the incoming regime is encouraged for businesses that plan to continue operating and submit permit applications. Exchanges and service providers should be ready to stop operating in Hong Kong if they do not intend to apply for a license.