Licensing virtual asset exchanges on an “opt-in” basis. On asset management, the regulator issued guidelines on the management of virtual asset funds and discretionary accounts. In addition, regulators provide guidance to banks and financial institutions on distributing virtual asset-related products, conducting virtual asset transactions, or providing advice on virtual assets. The relevant regulatory regime has also received wide support from the industry. We believe that a consistent, clear and clear overall regulatory framework can help lay a solid foundation to meet the financial innovation and technological development brought about by the rapid development of global virtual assets.
6. In order to further implement the above-mentioned comprehensive regulatory framework, we have recently worked to establish a licensing system for virtual asset service providers. Under the new system, virtual asset exchanges will be subject to the same regulations as existing traditional financial institutions in terms of combating money laundering and terrorist financing and protecting investors. Access to more investors in the Hong Kong market. Another benefit is that financial intermediaries and banks will be able to cooperate with their licensed counterparts from the virtual asset sector and, subject to relevant regulatory conditions, provide virtual asset trading services to their clients. From the perspective of virtual asset exchanges, the licensing regime allows them to open up new distribution channels in Hong Kong to capitalize on the city’s huge asset and wealth management market valued at over US$4.5 trillion. While stepping up preparations for the new licensing system, we are also happy to contact the global virtual asset industry and invite relevant exchanges to explore business opportunities in Hong Kong.
Investors’ exposure to virtual assets
7. We note that global investors (whether institutional or retail) are increasingly accepting virtual assets as an asset that can be used for investment allocation purposes. The Securities and Futures Commission (“SFC”) will launch a public consultation on the appropriate level of virtual assets that retail investors can trade under the new licensing regime. We also note that retail investors in other markets can also gain exposure to virtual assets through virtual asset-related products such as exchange-traded products. The Government welcomes the possibility of introducing virtual asset exchange-traded funds (“ETFs”) in Hong Kong, and the SFC will soon issue a circular in this regard. In addition, launching these products in Hong Kong can connect the virtual asset industry with traditional financial institutions and provide investors with well-designed products, thereby promoting the overall development of the industry in the Hong Kong market. Nonetheless, we will maintain a cautious and prudent attitude towards the risks of retail investors, strengthen investor education and ensure that appropriate regulatory arrangements are in place.
Title to Tokenized Assets
8. We note that virtual assets have different characteristics than traditional assets, and these characteristics may not be fully applicable to the existing types or definitions of private property rights in Hong Kong. In order to promote the adoption of virtual assets and strengthen investor protection, the government is open to reviewing the legality of property rights and smart contracts of tokenized assets in the future, in order to provide a sound legal basis for the property rights of tokenized assets.
stablecoin
9. Stablecoins are another focus of ours. Stablecoins also have the potential to be interconnected with traditional financial markets such as payment systems, given their purported ability to maintain value stability and their increasing use, such as as a medium of exchange for cryptocurrencies and fiat currencies. Drawing on the experience brought about by the recent crisis in the virtual asset market (crypto winter), there has been an international consensus that appropriate regulation must be established for different areas of stablecoins, including governance, stability and redemption mechanisms. In this regard, the Hong Kong Monetary Authority (“HKMA”) issued a discussion paper on the issue earlier this year, inviting relevant parties to formulate a risk-based, proportionate and flexible regulatory regime for regulating activities involving stablecoins for payment purposes. , and will release the consultation results and next steps later.
Experiment plan
10. The government and regulators are studying the launch of the following pilot schemes to test the technical benefits brought by virtual assets and try to further apply the technology to financial markets. It can be seen from these pilot plans that we are determined to work together with the global virtual asset industry to explore the road of financial innovation.
(a) NFT issuance for Hong Kong FinTech Week 2022, our proof-of-concept project to engage with the FinTech and Web3 communities;
(b) Green Bond Tokenization – Tokenizing government green bond issuances for subscription by institutional investors; and
(c) Digital HKD‥ can serve as the “backbone” and backbone between fiat currencies and virtual assets, providing the confidence needed to drive more innovation.
Details of the above pilot scheme are set out in the Annex.
Summary and Outlook
11. Hong Kong has a world-class financial infrastructure, legal and regulatory system. We are committed to promoting the sustainable development of various financial services along the entire virtual asset value chain, including virtual asset issuance, tokenization, trading and payment platforms, financial and Asset management, and custody, etc. The government is ready to embrace the future development of finance and commerce, and to support the technological development and social and economic benefits behind virtual assets, we welcome the fintech and virtual asset communities and talents to come together in Hong Kong. We will implement the vision set out in this policy statement through convenient policies, comprehensive and balanced regulation, risk-based regulation, and various pilot programs. The government sincerely invites the global virtual asset industry to join hands with us, leveraging Hong Kong’s status as an international financial center, complying with the best international standards and practices, and unleashing the potential of financial innovation in a clear, flexible and convenient regulatory environment.
APPENDIX: TRIAL PROGRAM FOR TESTING TECHNOLOGICAL BENEFITS OF VIRTUAL ASSETS AND FURTHER APPLICATION TO FINANCIAL MARKETS
Non-Fungible Token Issuance
1. Non-Fungible Tokens (“NFTs”) are an emerging Crypto asset ownership in recent years. Art creators and companies around the world use NFTs to build communities and connect with communities that share the same philosophy and goals. In 2022, the Treasury Bureau and Invest Hong Kong, which is responsible for investment promotion, will launch an NFT issuance pilot program in the annual flagship event “Fintech Week” to promote the use of NFTs.
2. The issued NFT will be used as a proof of attendance for participants, and participants will be sent Crypto badges and souvenirs through blockchain technology. This NFT issuance arrangement is simple, even beginners can easily get started. Users can store NFTs directly in their cryptocurrency wallets; if they are new to virtual assets and do not have cryptocurrency wallets, they can temporarily store them in their email addresses and convert them into NFTs later. We will provide a unique experience for NFT holders at “Fintech Week”, allowing them to create their own virtual avatars in the augmented reality world and start a metaverse experience journey.
3. The government sees this NFT issuance as a proof-of-concept project to encourage participation from the FinTech and Web3 communities and demonstrate our commitment to advancing financial innovation. We will also offer discounts to NFT holders, including discounted admission to next year’s FinTech Week, as well as early notification of invitations to other FinTech events (such as FinTech Proof of Concept tests) Funding program sharing sessions, FinTech training courses and other Fast Track and incubation programs).
Tokenization of green bonds
4. The tokenization of bonds can help improve the efficiency of bond issuance and settlement, reduce costs, and attract more investors to the market. The use of distributed ledger technology to streamline the green retail bond issuance process follows the earlier completion of Project Genesis, an innovation hub established by the HKMA and the Bank for International Settlements in Hong Kong, which developed two prototype projects using a permissioned platform and an open blockchain respectively. Proof-of-Concept), the HKMA is now launching a pilot program to issue government tokenized green bonds for subscription by institutional investors. The purpose of this initiative is to test the suitability of Hong Kong’s financial infrastructure and legal and regulatory environment to handle the entire bond issuance cycle (including issuance, settlement, asset servicing, secondary market trading and redemption) using distributed ledger technology, and to provide Provide guidance for market participants to issue similar bonds in the future. The government will announce more details later to inform the industry and the public about the progress of the project.
Digital Hong Kong Dollar
5. Virtual assets and cryptocurrencies are products of technological innovation, but they are not legal payment methods recognized by law and cannot be fully and effectively used for payment purposes, so they cannot become legal tender in Hong Kong. While we expect virtual assets and cryptocurrencies to drive a variety of financial innovations, as mentioned above, the government and regulators believe that Hong Kong needs to explore the possibility of launching a central bank Crypto currency (“Digital HKD”) at the same time.
6. The HKMA had consulted the market earlier, and the results showed that the respondents supported the launch of the “Digital Hong Kong Dollar”, and believed that the “Digital Hong Kong Dollar” could improve payment efficiency and contribute to the development of Hong Kong’s Crypto economy. To prepare for the possible launch of the “Digital Hong Kong Dollar” in the future, the HKMA will adopt a “three-track approach” to explore the following issues involved in the “Digital Hong Kong Dollar” in phases: 1) technical and legal basis; 2) usage and design; and 3 ) launch schedule of “Digital HKD”. We believe that for the global virtual asset industry, the significance of the “Crypto Hong Kong dollar” is that it can serve as the “backbone” and pillar connecting legal tender and virtual assets, so it can stabilize prices and give people confidence. With these two elements , which can drive more financial innovations in security token issuance by asset class.
Disclaimer: This content is the author’s independent opinion, does not represent the position of 0x Finance, and does not constitute investment advice. Please treat it with caution. If you need to report or join the exchange group, please contact WeChat: VOICE-V.
Source: Chain Sound Blackboard News