Tag: Hong Kong

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Hong Kong regulators take action against cryptocurrency exchanges and ICOs
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Hong Kong launches regulatory sandbox
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FCA’s Hong Kong Hat Trick of FinTech Cooperation Agreements
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Malaysia signs a series of cooperation agreements
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Hong Kong Securities and Futures Commission statement on initial coin offerings
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Hong Kong and South Korea on ICOs
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Dubai and Hong Kong sign cooperation agreement
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ASIC extends FinTech cooperation to Asian counterparts
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Regulators in the UK and Hong Kong sign co-operation agreement
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UK and Hong Kong sign cooperation agreement

Hong Kong regulators take action against cryptocurrency exchanges and ICOs

By Rizwan Qayyum

Hong Kong’s Securities and Futures Commission (“SFC”) have issued formal warnings to seven cryptocurrency exchanges and seven issuers of initial coin offerings. This follows their initial statement on ICOs released on 5 September 2017, and represents their first regulatory action.

The SFC has sent letters to seven cryptocurrency exchanges “in Hong Kong or with connections to Hong Kong”, which provides a warning that they should not be trading cryptocurrencies which are “securities” as defined in the Securities and Futures Ordinance (“SFO”) without a licence.  The exchanges responded immediately, either by confirming that they do not provide trading services for such currencies or took rectification measures, including removing relevant cryptocurrencies from their platforms.

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Hong Kong launches regulatory sandbox

By Jonathan Lawrence

The Hong Kong Securities and Futures Commission (SFC) launched a regulatory sandbox on 29 September. The sandbox provides a confined regulatory environment for qualified firms to operate regulated activities under the Hong Kong Securities and Futures Ordinance (SFO) before FinTech is used on a fuller scale to the wider public. The SFC emphasises the importance of the integrity of the market and investors’ interests, and says it will not compromise regulatory requirements which are key to investor protection. For example, a qualified firm operating in the sandbox must be fit and proper and must comply with the applicable financial resources requirements.

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FCA’s Hong Kong Hat Trick of FinTech Cooperation Agreements

By Jonathan Lawrence

The UK Financial Conduct Authority (FCA) has completed a hat trick of FinTech cooperation agreements with Hong Kong regulators by signing an agreement with the Hong Kong Insurance Authority (IA). This adds to those agreements already signed by the FCA with the Hong Kong Monetary Authority (HKMA) and the Hong Kong Securities and Futures Commission (SFC) on which we have blogged in previous posts.

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Malaysia signs a series of cooperation agreements

By Jonathan Lawrence

On 14 September the Securities Commission Malaysia (SC) announced that it has signed a series of FinTech cooperation agreements with several regulators in major financial centres. The SC has established FinTech bridges with the Hong Kong Securities and Futures Commission (SFC), the Dubai Financial Services Authority (DFSA) and the Monetary Authority of Singapore (MAS). This follows the first agreement signed between the SC and the Australian Securities and Investments Commission (ASIC) in June 2017.

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Hong Kong Securities and Futures Commission statement on initial coin offerings

By Jonathan Lawrence

The Hong Kong Securities and Futures Commission (SFC) issued a statement about initial coin offerings (ICOs) on 5 September.  The SFC noted an increase in the use of ICOs to raise funds in Hong Kong and elsewhere. The SFC said that, depending on the facts and circumstances of an ICO, digital tokens that are offered or sold may be “securities” as defined in the Hong Kong Securities and Futures Ordinance (SFO), and therefore subject to the securities laws of Hong Kong. ICOs typically involve the issuance of digital tokens, created and disseminated using distributed ledger or blockchain technology.

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Hong Kong and South Korea on ICOs

By Rizwan Qayyum and Robert Crea

Hong Kong’s Securities and Futures Commission released a statement discussing whether existing regulations could be applicable to ICOs. This is a move likely precipitated by China’s ban on ICOs announced earlier this week.

The Executive Director of Intermediaries at the SFC, Julia Leung, warned that purchasers and those involved in an ICO need to be “that some ICO structures may be subject to Hong Kong securities laws.”

South Korean regulators have also taken a step towards tightening ICO regulation. South Korea’s digital currency task force group, comprised of the country’s central bank, and the Financial Services Commission (amongst other bodies) held a meeting on 3 September 2017, in which they discussed ICOs. It was noted that authorities will punish ICO fundraising platforms for violating the Capital Market Act by raising funds through stock issuance using digital currencies.

Dubai and Hong Kong sign cooperation agreement

By Jonathan Lawrence

On 28 August, the Dubai Financial Services Authority (DFSA) and the Securities and Futures Commission (SFC) of Hong Kong entered into a co-operation agreement to establish a framework for mutual assistance to keep abreast of the development and application of FinTech in their jurisdictions. Under the agreement, the SFC and the DFSA will cooperate on information sharing, potential innovation projects and referrals of innovative firms seeking to enter one another’s markets.

The agreement follows the launch of:

  • the SFC’s FinTech Contact Point in March 2016 to enhance communication with businesses involved in the development and application of FinTech and RegTech in Hong Kong. Its purposes is to facilitate the FinTech and RegTech community’s understanding of the current regulatory regime in Hong Kong and to enable the SFC to stay up to date with industry developments; and
  • the DFSA’s regulatory FinTech regime (see some of our earlier posts on FinTech in Dubai – crowdfunding, accelerator and innovation testing licences)

ASIC extends FinTech cooperation to Asian counterparts

By Jim Bulling and Michelle Chasser

On 13 June 2017, the Australian Securities and Investments Commission (ASIC) entered into a FinTech co-operation agreement with the Hong Kong Securities and Futures Commission (SFC). Soon after, on 23 and 27 June 2017, ASIC also entered into similar arrangements with the Japan Financial Services Agency (JFSA) and the Malaysia Securities Commission (MSC). These arrangements provides a framework for ASIC to work more closely with these regulators.

As a result of these agreements, ASIC, SFC, JFSA and MSC can refer FinTech businesses to each other for advice and support via ASIC’s Innovation Hub, SFC’s FinTech Contact Point, JFSA’s FinTech Support Desk and MSC’s alliance of FINtech community (aFINity). This means Australian FinTech businesses wishing to operate in Hong Kong, Japan or Malaysia will now have a simple pathway for engaging with those countries’ regulators, and vice versa. This can provide valuable assistance for FinTech businesses operating in one jurisdiction which want to better understand the rules in the other.

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Regulators in the UK and Hong Kong sign co-operation agreement

By Jonathan Lawrence

On 12 May the UK Financial Conduct Authority (FCA) entered into a co-operation agreement with the Securities and Futures Commission (SFC) in Hong Kong to foster collaboration in support of FinTech innovation. Under the agreement, the FCA and SFC will co-operate on information sharing and referrals of innovative firms seeking to enter one another’s markets.

The FCA signed a similar agreement with the Hong Kong Monetary Authority in December 2016 (see previous post). This new announcement means that the FCA now has agreements with a number of key regulators in Hong Kong. The agreement follows the creation of the FCA’s Innovation Hub in 2014 and the SFC’s FinTech Contact Point in 2016.

UK and Hong Kong sign cooperation agreement

By Jonathan Lawrence

FinTech companies and other innovative financial businesses will be given help to establish overseas operations in the UK and Hong Kong by regulators in those countries under a new cooperation agreement signed in London on 9 December 2016. Under the agreement, the UK’s Financial Conduct Authority (FCA) and the Hong Kong Monetary Authority (HKMA) will “refer to each other innovator businesses that would like to operate in the other authority’s jurisdiction”.

Upon a referral being received, the FCA or HKMA both intend to “assist the innovator businesses in understanding the regulatory regime” that they oversee and explain “how such regimes may be relevant” to those companies. The agreement also confirms that the FCA and HKMA intend to “share information about innovations in financial services in their respective markets”, such as on emerging trends and regulatory issues pertaining to innovation. The FCA and HKMA may also pursue “joint innovation projects on the application of novel financial technologies”, share expertise and knowledge, and facilitate staff secondments to one another, under the new cooperation agreement.

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