Hong Kong Watchdog to Issue Exchange Licensing Rules

The new rules, issued by the Hong Kong Securities and Futures Commission are based on the standards that are applied to licensed brokers
06 November 2019   327

The Hong Kong Securities and Futures Commission (SFC) has published rules governing "trading platforms for virtual assets." The regulator’s license will be able to get platforms where at least one security token is traded.

The new rules are based on the standards that SFC applies to licensed brokers. They cover asset retention, compliance with KYC / AML rules and the prevention of market manipulation.

The rules also include additional requirements to address specific risks associated with cryptocurrencies. SFC requires licensed platforms to offer services exclusively to professional investors and adhere to strict criteria for listing digital assets. Licensees will be placed in a regulated sandboxed SFC (sandbox) for the supervision period.

The regulator emphasized that he does not have the authority to license and control platforms on which exclusively cryptocurrencies without the properties of securities are traded.

SFC also warned investors about the risks associated with the purchase of futures for virtual assets. According to the regulator, trading in such derivatives is largely unregulated and subject to extreme volatility.

US Crypto Companies to Support TON in Case With SEC

The Blockchain Association said Telegram taken sufficient measures to ensure that the Gram token offer met SEC requirements
23 January 2020   121

The Blockchain Association, which combines companies such as Coinbase, Circle, 0x and Ripple, issued an expert opinion as part of the ongoing proceedings of the US Securities and Exchange Commission (SEC) with Telegram.

Previously, the Digital Commerce Chamber launched a similar initiative. The blockchain association, however, was more straightforward and stated that Telegram had taken sufficient measures to ensure that the Gram token offer met SEC requirements. According to members of the organization, the actions of the SEC can damage not only Telegram, but the market as a whole.

The Court should not block a long-planned, highly anticipated product launch by interfering with a contract between sophisticated private parties. Doing so would needlessly harm the investors that securities laws were designed to protect.

 

The Blockchain Association

The Blockchain Association notes that for many years it has not been possible for SEC to obtain clear and unambiguous guidance for conducting activities in the cryptocurrency space, while the claims of the regulator make the current situation even more ambiguous. 

The SEC’s lawsuit also raises novel questions regarding whether companies are forbidden from raising funds from sophisticated U.S. investors, under well-established regulatory provisions, to build blockchain networks.

 

The Blockchain Association

They cite examples of startups TurnKey Jet and Pocketful of Quarters, in respect of which the regulator recommended not to apply legal measures, adding that such litigations inevitably involve high costs and do not guarantee industry participants that they will not be prosecuted in the future.

Telegram discussed its plans with SEC staff for a year and a half, provided copious information and responded to limited feedback by adjusting the design of its transaction. Yet, at the end, the SEC has sued, and the SEC’s briefs thus far say nothing about the substance of those discussions. 

 

The Blockchain Association

In conclusion, the group asks the court to “reject the SEC’s arguments that the not-yet-in-existence Grams were securities at the time of the Purchase Agreements.”