🧔♂️ A friendly human may check it before it goes live. More news here
Hong Kong securities group opposes stricter crypto licensing rules
Hong Kong’s securities industry group, the Hong Kong Securities and Futures Professionals Association (HKSFPA), has raised concerns about proposed changes to the city’s virtual asset management regulations, warning they could limit participation from traditional asset managers.
The regulators are consulting on new licensing rules for virtual asset dealing, advisory, and management services.
The association objected to plans that would eliminate the current “de minimis” threshold, which allows firms holding a Type 9 license to invest less than 10% of a fund’s assets in crypto without a separate license.
The proposed regulations would require even minimal crypto exposure, such as 1%, to trigger full licensing requirements.
HKSFPA argued this approach could increase compliance costs and discourage managers from exploring crypto investments.
The association also criticized proposed custody rules, which would mandate assets be held through licensed custodians, potentially impacting early-stage token investments and Web3-focused venture funds.
🔗 Source: The Block
🧠 Food for thought
Implications, context, and why it matters.
Whether Hong Kong’s proposed custody rule can be carried out remains unclear
- A proposal that virtual asset managers be required to use Securities and Futures Commission (SFC)-licensed custodians has been criticized as “impractical,” especially for private equity and venture capital funds holding early-stage tokens that local custodians may not yet support.
- To test that claim, it would need to be confirmed whether any SFC-licensed virtual asset custodians are currently available in Hong Kong and whether the specific tokens these funds need could be held by them.
- More detail would be needed on how many SFC-licensed custodians operate and which digital assets are supported, so the supply of these required services for Hong Kong-based asset management firms can be judged.
Regtech and compliance advisers could gain work if asset managers face new licensing rules
- Removing the “de minimis” threshold could force Type 9 asset managers (licensed for discretionary portfolio and asset management) to get a virtual asset management licence even for a small position such as 1% exposure to bitcoin.
- Regtech vendors (firms that sell regulatory compliance software) and compliance advisers could then sell help to managers worried about “significant compliance costs,” even when crypto exposure stays limited.
- Services could cover licence applications, risk management frameworks, plus ongoing compliance and reporting so traditional asset managers can add crypto exposure without building a full in-house compliance team.
