Hong Kong SFC Considers Licensing and Regulation for DeFi Projects

The Hong Kong Securities and Futures Commission (SFC) suggests that decentralized finance (DeFi) projects may face licensing and regulatory procedures if they fall under the authority of the Securities and Futures Law. Keith Choy, the temporary head of intermediaries at the SFC, highlights concerns about financial stability, transparency, and investor protection in the DeFi sector.

The Hong Kong Securities and Futures Commission (SFC) has stated that if decentralized finance (DeFi) initiatives fall under the authority of the Securities and Futures Law, they may be subject to licensing and regulatory procedures (SFO). This declaration follows the publication of recent papers on DeFi legislation in the United States and France.

Keith Choy, the temporary head of intermediaries at the SFC, claimed during a lecture at the Web3 Festival in Hong Kong that DeFi operations coming under the jurisdiction of the SFO would be subject to the same regulatory requirements as traditional financial services.

Although the SFC had earlier recognized DeFi as an area in need of regulation, it had not yet established its position on the topic. Choy’s remarks reflect increasing global attention on the regulation of DeFi projects, which might have important ramifications for the industry’s future development.

“Providing automated trading services is a regulated activity under the SFO, If a decentralized platform allows trading in virtual assets, which constitutes securities or futures as defined under the SFO, the platform and operators are required to have a Type 7 license.”

Keith Choy

DeFi presents regulators with issues of financial stability and limited transparency due to a lack of data and unregulated firms and activities, according to Choy, while also highlighting market integrity issues such as price oracle manipulation, front-running transactions, and investor protection concerns.

The Hong Kong Securities and Futures Commission, as regulators worldwide pay close attention to the potential risks and challenges associated with decentralized finance, the future development of the DeFi industry will likely be shaped by these regulatory efforts. These measures aim to address concerns surrounding financial stability, transparency, and investor protection while fostering innovation and growth in the emerging market, ultimately striking a balance between the interests of the industry and the well-being of investors.

Previous Article

Buy Ledger Nano, Earn $BTC

Next Article

Binance.US to Delist $SPELL and $TRX

Related Posts