The tightening oversight of digital asset firms in Hong Kong has sparked concerns about potential disruptions to crypto managers’ operations.
The Hong Kong Securities & Futures Professionals Association (HKSFPA) has warned about the risks associated with the proposed new licensing requirements without a transition period.
Hard launch timing concerns
The HKSFPA is worried that a sudden enforcement of licensing could compel compliant firms to cease operations, even if they have applied for licenses.
This abrupt implementation could disrupt the functioning of businesses that are currently legal but awaiting approval under the new system.
Advocacy for a grace period
The HKSFPA has proposed a six to twelve-month grace period for businesses that apply before the new regulations take effect, allowing them to continue operations throughout the licensing process.
Without this buffer, even compliant firms could face shutdowns due to administrative delays in the licensing process.
Ongoing review of expanded oversight
The proposed regulations aim to broaden oversight of virtual asset services beyond trading platforms to include advisory and fund management services in Hong Kong.
While the industry supports enhanced regulatory standards, rigid timelines could hinder institutional participation and slow down the adoption of compliant crypto infrastructure.
Concerns about implementation risk
The HKSFPA also raised concerns about the upcoming Crypto Asset Reporting Framework (CARF) aligning with OECD recommendations, emphasizing the need for flexible execution to avoid operational and legal pitfalls.
In conclusion, while industry players welcome regulation, the execution must not create unnecessary obstacles that drive firms out of the market.
Be the first to comment