The Hong Kong Securities and Futures Fee (SFC) has acknowledged that retail merchants is not going to be allowed to commerce stablecoins pending new regulatory preparations for this asset.
In response to SFC concluded a consultancy paper on regulating digital asset buying and selling platforms by claiming that there’s a must give attention to the dangers of stablecoins and their regulation.
SFC claims that its rationale is predicated on the necessity to make sure that stablecoin reserves are correctly managed for value stability and that traders can train redemption rights. It added that if these dangers are usually not adequately managed, they’ve “basic implications for stablecoin stability.”
The regulator highlighted the Hong Kong Financial Authority (HKMA) dialogue paper on stablecoins requiring stablecoin issuers to be licensed and limiting the proliferation of algorithmic stablecoins.
“A stablecoin that’s unable to take care of its peg or return traders’ funds on redemption can’t be mentioned to be secure. Moreover, their elevated vulnerability to run severely impacts their liquidity and makes them usually unsuitable for retail traders.”
In the meantime, SFC famous {that a} new regulatory regime is anticipated to be applied for stablecoins earlier than the tip of subsequent 12 months.
Retail entry to crypto buying and selling
Whereas retailers is not going to be allowed to commerce stablecoins, SFC will enable licensed buying and selling platform operators to service retail traders with non-security tokens with no less than 12 months of no-bad document.
SFC mentioned it is going to implement sturdy measures to guard these traders, together with guaranteeing compliance within the onboarding course of, good governance, enhanced token due diligence, acceptance standards, and disclosure.
SFC CEO Julia Leung mentioned:
“Hong Kong’s complete digital asset regulatory framework follows the precept of ‘equal enterprise, equal danger, equal guidelines’ and goals to offer sturdy investor safety and handle key dangers. It will allow the trade to develop in a sustainable method and assist innovation.”
No mortgage, mortgage service
In the meantime, digital asset buying and selling platforms licensed by SFC can not present buyer companies corresponding to acquisition, withdrawal of deposits, loans and loans.
In response to the monetary regulator, the principle operate of licensed platforms is “to behave as an agent and supply avenues for the matching of orders between shoppers.” SFC added:
“Every other exercise could create a possible battle of curiosity and require further safety. As such, licensed VA buying and selling platforms is not going to be permitted to hold out this exercise at this stage.”
Additionally, these platforms can not present their shoppers with algorithmic buying and selling companies.
SFC additionally mentioned licensed platforms ought to hold most of their shoppers’ digital belongings in chilly storage to scale back hacking and different cybersecurity dangers.
The Hong Kong submit is not going to enable retail prospects to commerce stablecoins showing the primary time on CryptoSlate.
