Just a few days ago, on September 25, Hong Kong Securities and Futures Commission Chief Executive Officer Leung Fengyi, Executive Director of the Regulation Enforcement Department Wei Hongfu, and Financial Technology Group Director Huang Lexin attended the SFC’s press conference on issues related to virtual asset trading platforms. At the press conference, the Hong Kong Securities and Futures Commission stated that it will further optimize the existing virtual asset trading supervision to reduce the risks of virtual currency trading.

The industry generally believes that the optimization measures announced by the Hong Kong Securities Regulatory Commission at the press conference on September 25 are a response to the JEPX case, and the corresponding measures are also a reflection of the further clarity and transparency of virtual asset supervision in Hong Kong. Today, the Sajie team will analyze for everyone the four major regulatory optimization measures proposed by the Hong Kong Securities Regulatory Commission at the press conference and their possible subsequent impacts.

**01, **Current Hong Kong VASP licensing system and related issues

Since Hong Kong began to announce its embrace of virtual assets and prepare to build a world virtual asset center at the end of 2022, it has made a series of arrangements on regulatory standards. Generally speaking, Hong Kong’s current virtual asset regulatory framework generally includes virtual assets in the “licensing process.” "style" financial regulatory system. In order to achieve the above regulatory purposes, the Hong Kong Legislative Council completed the latest revision of the "Anti-Money Laundering and Counter-Terrorist Financing Ordinance" (hereinafter referred to as the "Anti-Money Laundering Ordinance") on December 7, 2022. The Anti-Money Laundering Ordinance serves Hong Kong's virtual assets Businesses have created a licensing system, which officially came into effect on June 1 this year. According to the anti-money laundering regulations, operating regulated virtual asset businesses in Hong Kong must hold corresponding virtual asset licenses and traditional financial supervision licenses. (Also known as the "double licensing" system.) In view of the long application cycle for virtual asset licenses, the Hong Kong regulatory authorities have established a "transition period" arrangement for the original virtual asset trading platform, which is June 1, 2023. Virtual asset trading platforms that are currently providing virtual asset services in Hong Kong and are ready to comply with the Securities and Futures Commission's standards will be provided with reasonable and sufficient time to apply for the corresponding license. This type of platform can continue to operate within 12 months from June 1, 2023, and needs to submit a complete license application to the China Securities Regulatory Commission before February 29, 2024.

In other words, virtual asset trading platforms that have carried out substantial business in Hong Kong before June 1, 2023 can still continue to operate for one year after the anti-money laundering regulations take effect. But the problem is that the Hong Kong Securities and Futures Commission has not previously announced which virtual asset trading platforms are "in the transition period" and which platforms have closed down. At the same time, what is criticized by the majority of virtual asset investors is that the Hong Kong Securities and Futures Commission has not announced which platforms are applying for virtual asset licenses. It is precisely because of the above-mentioned opacity that some investors are strongly dissatisfied. The opacity of the VAPS license application list and the recent JEPX case are the triggers for the Hong Kong Securities and Futures Commission to announce the latest regulatory optimization measures.

**02. What does ******************** include in the latest optimization measures? *******************‍‍‍‍‍

(1) Transparency in the list of virtual asset platforms

In response to the opacity of the application list and the resulting concerns among some investors about the security of virtual asset platforms, the Hong Kong Securities Regulatory Commission will continue to publish four lists of virtual asset platforms on its website. The four lists include: 1. Licensed platforms List; 2. List of graduated platforms; 3. List of platforms deemed to be licensed; 4. List of applicants for virtual asset trading platforms.

The "List of Licensed Platforms" lists the names of virtual asset trading platform operators officially licensed by the China Securities Regulatory Commission. Currently, the list still only includes two companies, namely OSL Digital Securities Co., Ltd. and Hash Blockchain Limited. These two companies Obtained virtual asset licenses on December 15, 2020 and November 9, 2022 respectively.

(The above is the list of licensed platforms)

The "List of Closing Platforms" lists the names of virtual asset trading platform operators that must close down within a limited period in accordance with anti-money laundering regulations. As of September 30, there are no relevant companies on the list of the China Securities Regulatory Commission.

The "List of Virtual Asset Trading Platforms Regarded as Licensed" lists the names of operators of virtual asset trading platforms deemed to be licensed before June 1, 2024, that is, virtual asset trading platforms that enjoy the "transition period" name. Currently, there are no relevant companies on the list on the China Securities Regulatory Commission website.

The “List of Virtual Asset Trading Platform Applicants” lists the operators of virtual asset trading platforms that have not yet been approved by the China Securities Regulatory Commission. In other words, the platforms in this list have applied for virtual asset trading licenses but have not obtained the licenses. The China Securities Regulatory Commission The Commission will also remind traders that applicants for such virtual asset trading platforms may not necessarily comply with the requirements of the Securities Regulatory Commission. There are currently four company names of virtual asset trading platform operators in the list, namely Hong Kong BGE Limited, Hong Kong Digital Asset Trading Group Co., Ltd., Hong Kong Virtual Asset Exchange Co., Ltd., and Victory Digital Technology Co., Ltd.

(The above is the list of applicants for the virtual asset trading platform)

In addition to the four major lists mentioned above, in order to further protect the interests of virtual asset investors, the Hong Kong Securities Regulatory Commission has previously announced a "list of unlicensed companies and suspicious websites". As of September 28, 2023, the list includes 6 virtual assets The name of the asset trading platform.

(The above is the name of the suspicious trading platform)

(2) Strengthen investor education and launch virtual asset risk publicity activities

The Hong Kong Securities and Futures Commission and the Investment Committee are about to launch a series of public publicity activities on the themes of virtual asset investment risks and major issues in the virtual asset industry. This series of publicity activities aims to strengthen the anti-fraud awareness of investors in the virtual asset business in different ways. , risk awareness, and try to ensure the property safety of virtual asset trading investors.

(3) Strengthen police cooperation and criminal intelligence collection mechanisms related to virtual asset transactions

The Hong Kong Securities and Futures Commission further emphasized the need to strengthen cooperation with the police. Relevant measures include establishing special channels, sharing information on suspicious activities and irregularities on virtual asset trading platforms, intensifying the crackdown on crimes related to virtual asset trading, and taking into account the current actual situation. There are issues such as further optimization of the virtual asset trading supervision model.

03, Write at the end‍‍‍‍‍‍‍‍‍‍‍‍‍

Judging from the optimizing regulatory measures announced by the Hong Kong Securities Regulatory Commission at the press conference, especially the measures that were immediately put into practice such as the transparency of the regulatory list, the impact of the JEPX case on the Hong Kong Securities Regulatory Commission is huge, just as the Hong Kong government formulated the virtual asset regulation The original intention of the regulations is to provide a regulated channel for virtual assets, and to protect the safety of investors as much as possible while developing the virtual asset business. Before the implementation of "application list transparency", the public did not know each platform in a short period of time. There is also a lack of awareness of platforms with irregularities and suspicious behaviors. This is actually contrary to the original intention of Hong Kong’s virtual asset licensing system. This is why the Hong Kong Securities Regulatory Commission can make such quick decisions after discovering problems. reason for the reaction.

Sajie’s team believes that the last two optimization measures proposed by the Hong Kong Securities Regulatory Commission will be implemented as quickly as the first measure. At the same time, Hong Kong’s current virtual asset regulatory policies will not change because of the JEPX case. After all, Hong Kong It has the ambition to build a world virtual asset center.