The upcoming former head of the Hong Kong Securities and Futures Commission (SFC), Carlson Tong Ka-shing, believes that Hong Kong is in need of a more vigorous framework for cryptocurrency trading. Tong also appeals for greater emphasis on investor protection within the volatile virtual currency trading arena.
Tong is scheduled to hand over his position as SFC head to Tim Lui Tim-leung on Friday, October 19,2018.
In an interview with South China Morning Post, he stated that it would be useless to issue a blanket ban on cryptocurrency trading given the global nature of the venture. He said:
“We do not think imposing a total ban on these platforms is necessarily the right approach, and it will not work in today’s internet world when trading can cross national boundaries. Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets.”
Tong’s ideas are in conflict with the status quo in mainland China where the country has chosen to crack down immensely on cryptocurrency trading along with ICOs. For Tong, a broader but robust regulatory framework would be best for all parties.
According to a report published earlier this year by Hong Kong’s Financial Services and Treasury Bureau (FTSB), cryptocurrencies weren’t a viable option for organized crime.
For Tong, an effective regulatory environment needs an extension of the SFC’s mandate to cover the emerging digital asset class. According to him, the regulatory watchdog’s purview only covers securities. This limitation isn’t exclusive to Hong Kong alone since other jurisdictions are going through similar issues of applying securities law to monitor and control digital asset trading.
Despite the SFC’s technical limitations, Tong believes it is important that Hong Kong works on a formalized regulatory framework for the cryptocurrency market.
“We have to carefully consider the regulatory approach for these platforms because they are new technology and may not qualify as securities. 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, while at the same time ensuring investors interest are being protected,” he explains further.
As Tong continuously advocates for more regulations, operators in Hong Kong believe such a move would be beneficial to the legitimacy of their enterprises provided the laws do not impede growth and development.