Lawyer: Crypto ATMs and OTC Operations Fall Outside Securities and Futures Ordinance Framework
On September 19, TuoniaoX.com reported that Hong Kong Economic Journal published an article stating that virtual asset trading platform JPEX collaborated with multiple local OTC (over-the-counter) exchanges in Hong Kong to attract funds, but OTC operations and cryptocurrency ATMs are currently unregulated. In the gray area during the transition period, the SFC allegedly allows certain platforms to onboard clients, causing confusion among investors.
On September 19, TuoniaoX.com reported that Hong Kong Economic Journal published an article stating that virtual asset trading platform JPEX collaborated with multiple local OTC (over-the-counter) exchanges in Hong Kong to attract funds, but OTC operations and cryptocurrency ATMs are currently unregulated. In the gray area during the transition period, the SFC allegedly allows certain platforms to onboard clients, causing confusion among investors.
Hong Kong financial market regulation and virtual asset lawyer Chan Ting-him stated that under the new framework, the scope of "providing virtual asset services" mainly applies to centralized trading platforms that are licensed under the Securities and Futures Ordinance and operate as traditional automated trading venues - meaning they use automated trading engines to match customer orders and provide custody services as ancillary services. As for street-based cryptocurrency ATMs and OTC businesses, they appear to fall outside the coverage of the new framework and do not need to cease operations after the transition period ends.
Regarding this regulatory gap, Arrano Tiu, Executive Director and Head of Regulatory Affairs at Hong Kong licensed platform OSL, said that Hong Kong must ensure the regulatory scope does not miss important parts of the industry, including OTC, non-automated virtual asset service providers, crypto custodians, and wallet companies.