Hong Kong’s securities watchdog reportedly surprised industry participants by underlining licensing requirements for decentralized finance platforms for virtual assets.
Decentralized finance (DeFi) platforms for virtual assets need a license under existing rules, according to a Securities and Futures Commission (SFC) representative during the four-day «Web3 Festival» in Hong Kong which kicked off on Wednesday.
«The SFC views DeFi activity through the same regulatory framework that applies to financial activities regulated by the SFC,» said an «SCMP» report citing Keith Choy, interim head of the intermediaries division at the SFC.
«As such, as long as DeFi activity holds within the scope of securities and futures, it would be subject to the same regulatory requirements applicable to traditional financial activity.»
New Regulation
In October 2022, Hong Kong unveiled its ambition to be a crypto hub and new regulations will come into effect in June requiring all virtual asset exchanges serving local customers to be licensed by the SFC.
«The premise of Web3 development is that the stability of the financial system and investor protection should not be damaged,” said Financial Secretary Paul Chan in a speech at the event. «I believe that everybody has learned from recent events that appropriate regulations are a must to create a sustainable development environment and a more ideal space for development.»
The Web3 Festival is organized by Hong Kong-based digital asset management firm HashKey Group and has registered over 10,000 sign-ups to attend the event.
