Hong Kong cryptocurrency firms are set to face stricter regulations, says the Securities and Futures Commission.
The Chinese territory has become known as a haven for crypto companies, given its laxer rules and regulations for the sector. ICOs have flourished in the territory, with foreign companies setting up base there. However, in a recent announcement, the government is set to tighten the reins.
Citing fraud and money laundering as the main issues, the Securities and Futures Commission has altered its guidelines, requiring exchanges/investment funds to acquire a license if their crypto assets are more than 10% of the total. Additionally, they will only be allowed to sell to professional investors.
The new guidelines do provide some leeway. That is, exchanges may test cryptocurrencies and related products for a period using a “regulatory sandbox”, after which they can decide on whether or not to apply for a license.
Hong Kong cryptocurrency firms will also be more limited in terms of launching ICOs. One critical requirement is that a token must have had existed for 12 months before an ICO can be issued.
As can be expected, reception is divided. Some feel that the restrictions may hamper the growth of the cryptocurrency sector, while others believe it will pave the way for confidence in digital currency.