Home Regulation DeFi projects could face regulatory requirements, says Hong Kong regulator

DeFi projects could face regulatory requirements, says Hong Kong regulator

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important point

  • Hong Kong regulators have revealed that DeFi projects may be subject to regulatory requirements.

  • The SFC said its DeFi activities fall within the Securities and Futures Ordinance.

  • Hong Kong’s new licensing regime for digital asset trading platforms will come into force in June 2023.

DeFi projects may face regulatory requirements in Hong Kong

Keith Choi, interim head of intermediaries for Hong Kong’s Securities and Futures Commission (SFC), said Wednesday, April 12, that decentralized finance (DeFi) projects could face licensing requirements and regulations in the country. revealed something.

According to the SFC, DeFi activities fall within the Securities and Futures Ordinance and are subject to the same regulatory requirements as traditional finance (TradFi).

Choy mentioned this during a talk at the Web3 Festival in Hong Kong.this latest cryptocurrency news After the US and France released recent reports on DeFi regulation.

Choy’s speech is not surprising, as the SFC has previously noted that the DeFi ecosystem needs regulation. However, regulators have yet to lay out plans on how to properly regulate the ecosystem. Choi said.

“The provision of automated trading services is an activity regulated under the SFO. If a decentralized platform permits the trading of virtual assets that constitute securities or futures as defined under the SFO, the platform and operator shall 7 You need to get a license.”

Collective investment schemes also require approval

The SFC noted that licensing requirements are also necessary if companies wish to offer collective investment schemes to the public in Hong Kong.

According to Choy, DeFi poses challenges for regulators, including limited financial stability and transparency due to lack of data and unregulated companies and activities.

He also discussed market integrity issues, including Oracle price manipulation, front-running trades, and investor protection concerns.

Hong Kong is one of the world’s leading cryptocurrency hubs. during February Interactive Brokers Launches Cryptocurrency Trading Service in Hong Kong.

Hong Kong’s new licensing regime for digital asset trading platforms is expected to come into effect in June 2023.

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