HK securities watchdog releases regulatory framework governing cryto asset funds

By Staff Writer

Hong Kong’s Securities and Futures Commission (SFC) has released a regulatory framework providing terms and conditions for licensed corporations that provide management of cryptocurrency fund portfolios.

As per the 37-page document, the rules apply to a category described as “virtual assets” and include any digital token of value – be it digital currency, utility tokens or security or asset-backed tokens. This also applies to “…any other virtual commodities, crypto assets or assets of essentially the same nature…”

The latest announcement builds on the regulatory framework established by the SFC in November last year. The framework is overarching as the conditions apply not only to specialised virtual asset funds but to any licensed portfolio manager who intends “…to invest 10% or more of the gross asset value of the portfolio in virtual assets.”

Virtual Asset Funds are, according to the SFC, to adhere to general principles of governance as well as meet specific funding requirements. Managers must always hold liquid capital of at least HK$3mn in addition to its variable required liquid capital and separate clients assets from their own under the protection of an independent custodian.

The Hong Kong SFC has previously established a reputation for actively policing initial coin offerings (ICOs) and providing formal guidance to the securities market.

The city-state, which is home to many crypto firms, has reportedly seen a growing interest in transactions in Bitcoin amidst escalating tensions between police and anti-government protesters.


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