Original title: currency circle can not be out of the ground! After the US and Singapore, the Hongkong virtual assets supervision
Old Ying Ying
The wave of compliance regulation is spreading to Hong Kong after ICO (the first token issue) is regulated in Singapore, the United States and other places.
Recently, the Hong Kong Securities Regulatory Commission issued a new regulation on virtual assets, requiring institutions issuing and distributing virtual currency assets products in Hong Kong to apply for licences, virtual asset exchanges to enter regulatory sandboxes, and funds with assets of more than 10% size (AUM) as virtual assets can only be sold to professional investors. Any fund and brokerage institution investing in virtual assets need to register with the SFC.
"This matter has been studied for a long time". Several Hong Kong currency circle insiders told the Economic Observer that Hong Kong's regulatory authorities had been concerned about virtual assets before the introduction of the new rules, and had conducted many rounds of in-depth communication with many currency circle professionals. Singapore and the United States have put virtual assets under supervision, which has sent a signal to the world that virtual currency assets need to follow a compliance line.
In September 2017, seven ministries and commissions, such as the Central Bank of China, formally defined ICO as an "unauthorized illegal financing act" and explicitly demanded that "any organization or individual cease to engage in ICO". Since then, many ICO start-ups have only chosen to develop overseas.
In the next 12 months, the first batch of licenses for virtual assets may be born. Can Hong Kong's experience be replicated to the mainland? Some senior mainland financiers also believe that, in view of the high incidence of financial fraud and the situation of anti-money laundering regulation in the mainland, there will be no signs of loosening the regulatory policy of virtual currency in the short term.
Li Bei is the founding partner of Central Digital, and his company is a Hong Kong consulting firm engaged in block chains. In his view, Hong Kong's virtual money assets business started later than the mainland, institutions and investors have a later understanding of the block chain, digital money assets, but Hong Kong is a financial center, as long as the money-related things everyone will study, after the study found that it is actually good.
Recently, Li Bei felt that Hong Kong's perception of digital currency assets had changed a little. "In the past, with a playful attitude towards Bitcoin, we are now taking this matter seriously. We are changing from an entertaining nature to an asset nature. Some brokerages or fund companies are also paying attention to this area. We are allocating digital asset analysts and researchers. Friends of the currency circle capital are also training Hong Kong asset management institutions."
There is also a sense of Hongkong's senior block chain people Zhang Li. He told the Economic Observer that although the block chain in Hong Kong has just started, more and more professionals from the Mainland and other countries are meeting in Hong Kong to study the technology of the block chain. Some of the main businesses of Listed Companies in Hong Kong that are not related to the block chain are slowly transformed into those related to the block chain. These companies even set up districts. The Association of Block Chain Listed Companies often brings together the chairmen or executives of some block chain companies that have been listed or are going to be listed.
Further substantive action in regulation may be attributed to the introduction of regulatory measures in Singapore and the United States for the ICO market. As early as November last year, the Singapore Financial Regulatory Authority issued special I-CO regulatory guidelines, opening regulatory sandboxes to monitor ICO projects. In October 18th, NASDAQ announced that it could enter the encrypted money market through a new platform. They are studying a securities licensing platform that will help companies issue licences and trade on the block chain as a way to raise funds, namely securities licensing sales (STO). STO, the full name Securi-ty Token Offering, is a kind of securities issued by Token. In the United States, STO is a legally compliant ICO. The core of STO meets the regulatory requirements of the US Securities Regulatory Commission, including due diligence, information disclosure and investors'deadlines for qualified investors, anti-corruption, money laundering and other purposes.
"STO's incorporation of virtual assets into regulation has sent a signal to the world that digital currency assets should follow a more compliant route. It is estimated that Hong Kong feels that the STO of the United States has a positive effect on this aspect. It conforms to the trend of asset ownership in the United States and other countries, and has taken some new measures for virtual currency. Arrangement. " Li Bei said.
In the new guidelines, the Hong Kong Securities Regulatory Commission (HKSFC) said that with the increasing demand for funds investing in virtual assets, even though virtual assets do not pose significant risks to financial stability, there is a broad consensus among securities regulators that virtual assets pose significant risks in investor protection. However, there are different regulatory strategies for these risks in different jurisdictions as to whether virtual assets are suitable financial products to be regulated.
According to the reporter of Economic Observer, the new regulation focuses on three aspects: one is that if you want to distribute products related to virtual currency or block chain in Hong Kong, you must apply for Hong Kong No. 1 license; the other is that you must apply for No. 9 license for virtual asset management and fund issuance; and the third is digital asset trading. So, for example, currently relatively large-scale fire coins, coins, OK, to enter the regulatory sandbox, it takes 12 months, during which time may only be able to trade the mainstream digital currency. (Note: The Hong Kong Securities Regulatory Commission has ten categories of licenses, the No. 1 is the Securities Exchange License, and the No. 9 is the Asset Management License). "Hong Kong needs to see whether a fully functioning platform has the ability to make money and operate independently, including technical capabilities and risk control. During this year, let the regulatory authorities see how the anti-money laundering/anti-terrorist financing of your platform works, and see that you are really doing a digital asset exchange instead of a digital asset exchange. It is a money laundering tool or other illegal trading platform, after 12 months of operation, if all aspects of the regulatory approval may have the opportunity to obtain a special digital currency exchange license in Hong Kong. The head of a Hongkong digital asset exchange said to the Economic Observer newspaper.
Reference to the mainland
Although there is a general regulatory scope in the guidelines, there are still many uncertainties.
The person in charge of the above-mentioned Hong Kong Digital Asset Exchange said that the current application conditions are not clear. The CSRC did not specify specific requirements. Enterprises can only try to apply on their own initiative. In the process of application, enterprises will also actively provide threshold, such as providing two compliant ROs (money laundering reporting officers, anti-money laundering compliance officers). Member, raise the registered capital and so on.
In addition, the new regulation for virtual assets issued by the Hong Kong Securities Regulatory Commission requires that funds with more than 10% asset size (AUM) belong to virtual assets can only be sold to professional investors. Any fund and brokerage institution investing in virtual assets need to register with the Securities Regulatory Commission. "This identification of digital assets, in fact, has been recognized before, for the assets are recognized, but at present the public entries are still very vague." Li Bei said.
The Economic Observer newspaper asked the Hongkong Securities Regulatory Commission whether there will be further details. The Hong Kong Securities Regulatory Commission responded that since the new regulation has just been introduced, it is still a framework. If there are specific rules, it will be published on the official website, but there is no specific timetable. "I think the future rules may have some restrictions on the subject matter of assets and the access threshold for investors." Li Bei said.
Shortly after the introduction of the new regulations, some people in the currency circle have been consulting him about the application for No. 9, such as operating expenses, application requirements, what professional background is needed for the exhibition industry, and what is different from the mainland, and so on.
According to the reporter from many sides, the main body that needs to apply for a license may have the following categories at present. First, the investors who focus on digital assets want to get a license to help some organizations issue products in compliance. The purpose of applying for a license is mainly the nature of investment. The purpose of obtaining a license is not to use it for themselves, but to use it for themselves. Transfer to others; secondly, digital asset exchanges such as Firecoin and Yuanyan, for which licensing is the only way to get approval from various countries or regulators. Generally speaking, such large-scale digital currency asset exchanges invest a lot in regulatory compliance, as long as they are within the scope of economic tolerance. Fight for a licence. However, according to the reporter's understanding, there are no institutions in Hong Kong to issue and distribute digital currency assets. It is not excluded that some funds can successfully issue token in the future, so they need to buy or participate in No. 9. "Token fund considers Hong Kong licences. Licensing is the endorsement of the government for the issuance of Token. Investors will also choose licensed institutions to invest. The biggest puzzle for them is the opacity of regulation. After the ICO was stopped in the mainland last year, the development of the encrypted money market has extended overseas. Li Bei thinks.
In September 2017, seven ministries and commissions, including the People's Bank of China, the Central Network Information Office, the Ministry of Industry and Information Technology, the General Administration of Industry and Commerce, the Banking Regulatory Commission, the Securities Regulatory Commission and the Insurance Regulatory Commission, issued announcements demanding that from the date of the announcement, all kinds of token issuance and financing activities should be stopped immediately. Organizations and individuals that have completed the issuance and financing of tokens shall make arrangements for clearance, reasonable protection of investors'rights and interests, and proper handling of risks.
Can Hong Kong's new regulations be used as a model for ICO regulation in the Mainland? "This regulation in Hong Kong can be said to be an ice-breaking move. If the first licenses can be approved in the next 12 months, then people can go to the Hong Kong Stock Exchange to open accounts. If the implementation is good, maybe they can copy Hong Kong's experience into China and try to use licensing system for reference to supervise ICO. Even if the implementation is not good, they can regard it as Small scale experiments in Hongkong. Zhang Li said.
Xue Hongyan, director of Internet Finance Center of Suning Institute of Finance, believes that in view of the high incidence of financial fraud in the mainland and the situation of anti-money laundering supervision, there will be no sign of loosening the regulatory policy of virtual currency in the short term.
Li Bei believes that the regulation of digital currency assets may be tried first in Hong Kong, which is good for the block chain enterprises, but it will not be released in the short term. It is only clear that the signal will be released, and it may land in three to five years. The Hong Kong Asset Management Platform may have a certain proportion of digital assets allocated through the corresponding. The fund channel sends out products.
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