Hong Kong Advances Crypto Regulation with New Framework for OTC Trading Platforms

Hong Kong has unveiled plans to introduce a regulatory framework for over-the-counter (OTC) cryptocurrency trading platforms, signaling a significant step toward enhancing transparency and security in the digital asset market. The Financial Services and the Treasury Bureau (FSTB) is set to release a consultation document, with the primary objective of regulating OTC platforms to mitigate fraud risks, especially those associated with unlicensed virtual asset (VA) trading platforms. Christopher Hui, the Secretary for Financial Services and the Treasury, highlighted the need to address instances of fraud where investors were misled into investing in unlicensed platforms. The proposed framework aims to subject OTC venues to rigorous rules, ensuring comprehensive regulation and effective monitoring to safeguard investors and establish a fair trading environment. Hong Kong’s proactive approach to crypto regulation aligns with its broader initiatives, such as creating a secure environment for retail investors and positioning itself as a prominent digital asset hub in the Asia-Pacific region. The move comes on the heels of the Securities and Futures Commission (SFC) taking steps six months ago to enhance safety for retail investors entering the crypto market by upgrading local exchange HashKey to offer regulated services. Additionally, Hong Kong has explored the possibility of allowing individuals to invest in crypto exchange-traded funds (ETFs). With these measures, Hong Kong aims to strengthen its standing in the evolving landscape of digital assets.

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