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The Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) recently updated their joint circular on the activities of virtual asset (VA) intermediaries, which replaced the previous one published last January.
This update came about due to industry inquiries about “expand[ing] access to retail through intermediaries i […] allow[ing] investors to directly deposit and withdraw virtual assets with/from intermediaries with appropriate safeguards”.
The updated circular highlights the increased expectations of the SFC and HKMA when intermediaries want to deal with retail customers. Specifically, it stated that intermediaries distributing VA-related products – other than to institutional professional investors and qualified corporate professional investors – should:
- providing information, including warnings, to clients about VA-related products and underlying VA investments that are clear and easy to understand; and
- provide clients with VA-specific risk disclosure statements (which may be one-off) on risks such as price volatility, hacking and market manipulation.
Click here to read our full analysis of Hong Kong’s updated guidelines.
China to crack down on crypto speculation and money laundering
Recently, he is the new governor of China’s central bank addressed the government there to submit a report on the response of the People’s Bank of China (PBOC) to changes in the economic situation.
The report highlights several key areas the PBOC plans to focus on to maintain the stability of China’s financial market and prevent risks.
As part of efforts to prevent and address hidden financial risks, the PBOC pledged to “sternly crack down” on illegal financial activities and illegal fundraising, as well as “resolutely curb speculation in domestic virtual currency transactions.” The governor also said that the bank must adhere to the principle of seeking progress while maintaining stability.
The UK is tightening the financial promotion regime for cryptoassets
On October 25, the UK’s Financial Conduct Authority (FCA) published warning of common problems with financial promotions of cryptoassets it identified after they came under its regulation on October 8. Issues include:
- claims about the “safety”, “security” or ease of use of cryptoasset services without emphasizing the risk involved;
- risk warnings are not sufficiently visible due to small fonts, hard-to-read colors or inconspicuous positioning; and
- failure of firms to provide customers with sufficient information about the risks of promoted products.
The FCA has stated that if authorized firms that approve financial promotions do not take their regulatory obligations seriously, the provision of such services will be restricted – which has already happened to an authorized firm.
The regulator added that it is currently working with social media platforms, apps, search engines and other entities to block illegal promotions in the country, as well as payment companies to limit consumer exposure to companies issuing illegal promotions, of which there are currently 221 on its warning list of non-compliant firms.
Crypto regulatory compliance in America
