Hong Kong's New Criteria on Crypto Exchanges Actually Isn't Important

Published on by Cointele | Published on

On Nov. 7, Ashley Alder, the CEO of the Securities and Futures Commission of Hong Kong, said at a conference that a new framework for crypto exchanges will be implemented.

Almost immediately after the announcement, Reuters reported that a crypto exchange based in Hong Kong called OSL became the first to apply for a license with the SFC. While the introduction of a license for crypto exchanges by the government of Hong Kong is widely viewed as positive reinforcement for the growth of the crypto sector in Asia, some view it as a redundant solution that fails to facilitate the needs of local exchanges.

In a conversation with Cointelegraph, George Harrap, the co-founder and CEO of Bitspark, a company based in Hong Kong that allows crypto-to-cash trades, said that the framework is not applicable to the majority of exchanges that operate within the region.

Most exchanges based in Hong Kong that provide support to local users and investors in mainland China through over-the-counter trading are focused on offering liquidity for major cryptocurrencies like Bitcoin and Ether rather than regulated security tokens.

The framework released by the SFC, in its current form, is not necessarily relevant to major exchanges that operate in Hong Kong.

Although the SFC's criteria for crypto exchanges has seen mixed reactions from the local community, several exchange executives consider it to be an overall positive factor for growth over the long term.

Despite being an important crypto exchange market in the aftermath of the imposition of a ban by the People's Bank of China on trading of cryptocurrencies, Hong Kong has lacked clear guidelines for exchanges for years.

Often, traders purchase Tether to invest in major cryptocurrencies and convert Tether to the Hong Kong dollar to sell their cryptocurrency holdings for fiat, as reported by SCMP. Previously, Terence Tsang, the CEO of Hong Kong- and Taiwan-based cryptocurrency exchange TideBit, said that the scrutiny from the Chinese government was targeted at local exchanges in China claiming to be based outside of the country, not at companies that are already based outside of the nation.

Regardless of the direction the SFC may be heading with its newly released criteria for exchanges, Hong Kong is moving toward tightening its oversight over the local cryptocurrency market.

As the global cryptocurrency exchange market adapts clearer policies for trading platforms that are described by the FATF as "Virtual Asset Service Providers," Hong Kong and others that have struggled to clearly define rules for exchanges in the past are expected to embrace more efficient policies.

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