Blockchain News Policy

Hong Kong Regulator: Cryptocurrencies ‘May Not Qualify as Securities’


Written by Samuel Haig, edited by Samantha

Cryptocurrency falls into a legislative grey area in many jurisdictions, which is why governments should take a particularly nuanced approach to develop regulatory frameworks for crypto trading, the outgoing chairman of Hong Kong’s securities regulator said in a recent interview.

Key Challenge for Legislators

Hong Kong Regulator: Cryptocurrencies 'May Not Qualify as Securities'

“We have to carefully consider the regulatory approach for these platforms because they are new technology and may not qualify as securities,” Carlson Tong Ka-Shing, the current chairman of the Hong Kong Securities and Futures Commission (SFC), told the South China Morning Post.

Tong, who will hand over the reins to incoming SFC Chairman Tim Lui Tim-Leung on Oct. 19, said cryptocurrencies pose a significant challenge to legislators.

“They do not fit in the custodian, audit or valuation requirements, for instance, normally expected under the Securities and Futures Ordinance,” he said. “No other international market currently has a comprehensive regulation (sic) framework for these cryptocurrency platforms.”

 Trading Bans Are Not a Practical Solution

Hong Kong Regulator: Cryptocurrencies 'May Not Qualify as Securities'Tong rejected the notion of prohibiting cryptocurrency trading platforms as a viable regulatory strategy. Such moves would prove fruitless in the current world, where trading can be freely conducted without concern for national borders, he argued.

“We do not think imposing a total ban on these platforms is necessarily the right approach,” he said, noting the importance of protecting the interests of investors. “Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets … We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue.”

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