The requirements for Digital Asset Service Suppliers (VASPs) in Hong Kong are “extremely excessive” because the Securities and Futures Fee (SFC) needs the crypto business to fulfill the identical compliance requirements as conventional monetary companies.
Chatting with Cointelegraph on the Hong Kong WOW Summit, Lucy Gazmararian, the founding father of crypto enterprise agency Token Bay Capital and a member of the SFC Fintech Advisory Group, defined that whereas they "set the bar excessive," they got here from a " good cause” are in place. ”
“The requirements are extremely excessive as a result of [the SFCs] The method is to ask VASPs to use the identical requirements that present monetary establishments equivalent to huge banks and enormous wealth managers are required to stick to.”
The SFC launched a session paper on Feb. 20 analyzing whether or not licensed VASPs ought to serve retail traders and what requirements of investor safety measures needs to be imposed.
Anti-Cash Laundering (AML) and Know Your Buyer (KYC) insurance policies have been additionally mentioned.
Gazmararian mentioned these excessive requirements may pose challenges for Hong Kong's crypto business within the brief time period.
"The issue is that crypto firms are sometimes within the early levels," she defined. "Many have grants, however not enormous quantities, not lots of of hundreds of thousands."
“Compliance with the framework comes at a major price,” she added, citing the necessity for native VASPs to have insurance coverage, impartial evaluation experiences, and chilly storage of crypto.
“One criticism was if you're a start-up crypto firm, how do you even get began? Will that suffocate the business?”
With a strong regulatory framework, Gazmararian believes extra well-capitalized monetary companies might be prepared to assist promising startups get off the bottom.
"I believe firms that get licensed might be upholding probably the most rigorous requirements, so the bar is ready excessive, however I believe with good cause," Gazmararian mentioned.
“Cryptocurrency platforms are a part of the general Net 3.0 ecosystem and we strongly assist the event of the general Web ecosystem.
— ivanferrari.eth.zk (@ferrarivarese) April 3, 2023
The SFC inspired people, firms and crypto companies to overview the 361-page session paper and supply suggestions.
The securities regulator needs these our bodies to share their views and level out issues which will have been missed as a result of they're "completely targeted" on getting issues proper, Gazmararian defined.
Submissions for suggestions on the session paper have been closed on March thirty first.
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