Hong Kong is gearing as much as usher in a brand new regime for digital asset regulation. The Securities and Futures Fee (SFC) printed the conclusions from its weeks-long session on regulatory tips for crypto platforms on Could 23.
Hong Kong crypto exchanges should search licenses beneath the Securities and Futures Ordinance (SFO) and the Anti-Cash Laundering and Counter-Terrorist Financing Ordinance (AMLO). The SFC will gazette the varieties on Could 25 and begin accepting functions on June 1, when the rules come into power. As of now, Hong Kong doesn’t have any licensed crypto platform for retail traders.
The laws impose varied necessities on crypto platforms. Beneath the rules, crypto platforms must make use of at the least two “accountable officers” (RO) for every sort of license it holds. So a crypto platform licensed beneath SFO and AMLO would wish to rent 4 ROs.
Accountable officers are a part of the highest administration and have to be licensed by the SFC and authorized as a RO of an trade. ROs additionally want in depth expertise with the intention to turn into licensed.
With crypto being a relatively new area, not many executives have crypto and blockchain experience. There are round 18,000 licensed ROs in Hong Kong, however solely 95 maintain the Kind 7 license for offering automated buying and selling companies that crypto exchanges are in search of.
There’s an evident lack of ROs, which has turn into a matter of concern for crypto exchanges vying for brand spanking new licenses. In reality, Lily King, chief working officer of Cobo, a digital-asset custodian making use of for a Hong Kong license, advised Bloomberg that ROs have turn into the “hardest place to fill in Hong Kong.” The report famous that it may take as much as 5 months to fill a RO place.
In view of the expertise crunch, the SFC revised the necessities in order that crypto exchanges which are dually licensed must make use of solely two ROs as an alternative of the beforehand prescribed 4. The SFC famous:
“As there could also be an absence of expertise with each digital asset and conventional securities expertise, we’re ready to undertake a realistic strategy…”
A profitable place in Hong Kong
To turn into a RO, a person must have years of administration expertise together with related expertise within the area or product they need a license in. A accountable officer, because the title of the place suggests, is in control of making certain that their companies adjust to all the foundations and regulatory necessities. And if their companies fail to conform, ROs may be topic to civil and felony penalties.
With the scarcity of ROs, crypto exchanges try to work with ROs in conventional finance. However such people are typically reluctant to alter their profession tracks to crypto, which is considered as riskier. Subsequently, they want extra incentives to modify sides, King advised Bloomberg.
With the continued scarcity, RO has turn into a profitable place in Hong Kong. The restricted variety of ROs which have blockchain and crypto expertise are paid as much as 20% extra in comparison with these in conventional finance, as per the Bloomberg report. In reality, the best RO salaries in Hong Kong have crossed $19,000 per 30 days, as per the report.