In terms of blockchain and cryptocurrency, it has been an eventful week for China government. First, the Supreme People’s court of China said that blockchain could be used to resolve disputes, then a Chinese court recognized bitcoin as legitimate, despite government’s uncertainty.
Now it appears, the government is all set to regulate cryptocurrencies, after a year of uncertainty. Hong Kong’s regulatory body Securities and Futures Commission (SFC) released a statement that said they were concerned with the growing interest in cryptocurrencies among investors and had “identified significant risks associated with investing in virtual assets.”
Taking into account various issues (dangers and otherwise) associated with cryptocurrencies, the SFC has decided to adopt new measures within its regulatory remit to protect investors investing in cryptocurrencies, according to an official press release. The body has stated that it will supervise cryptocurrency companies that manage funds which solely invest in virtual assets that do not constitute “securities” or “futures contracts” and distribute the same in Hong Kong and firms which are licensed or are to be licensed for Type 9 regulated activity (asset management) for managing portfolios in “securities”, “futures contracts” or both.
Ashley Alder, the SFC’s Chief Executive Officer (CEO) said, “The measures announced today allow us to regulate the management or distribution of virtual asset funds in one way or another so that investors’ interests would be protected either at the fund management level, at the distribution level, or both.”
Alder added, “We hope to encourage the responsible use of new technologies and also provide investors with more choices and better outcomes.”
Although this is a progressive step, the regulatory body is not clear whether exchanges would satisfy the expected anti-money laundering standards, since that anonymity is the core feature of blockchain, which is the underlying technology for virtual assets. Once an exchange gets license it is only the start as they would have to be on the receiving end of constant reporting, monitoring and reviews so that through close supervision by the SFC.
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