The Hong Kong government strives for a dynamic balance between supporting virtual asset trading platform practitioners and protecting the interests of virtual asset investors.
Written by: Sister Sa Team
On the afternoon of May 23, 2023, Beijing time, the Securities and Futures Commission of the Hong Kong Special Administrative Region (SECURITIES AND FUTURES COMMISSION, hereinafter referred to as the Hong Kong Securities Regulatory Commission) issued the "About the Operation of Virtual Asset Trading Platforms Applicable and Licensed by the Securities and Futures Practice Commission". "Consultation Summary of Regulatory Regulations Suggested by Authors" (hereinafter referred to as the "Consultation Summary of Virtual Assets"), **shows the Hong Kong Special Administrative Region's open attitude and regulatory thinking towards virtual asset transactions, and gives a complete response to the suggestions made by the public. The process is transparent and clear, which is impressive. **
File directory, very impressive
In terms of style, the Hong Kong Securities Regulatory Commission’s virtual asset consultation summary is divided into four parts: summary, comments and responses from the Securities and Futures Commission, implementation timetable, and appendix (the appendix includes the final version with a revised mark).
The abstract, at first glance, looks a lot like the "abstract" in an academic paper. Its purpose is to allow readers who are unfamiliar with this field or readers who are in a hurry to quickly grasp the problems and ideas to be solved in the document. Unlike the abstract of an academic paper, which is a condensed text, the abstract written by the Hong Kong Securities Regulatory Commission marked 7 points. **The first point is the source of law; the second point is to clarify the deadline for consultation and the number of copies to receive opinions; the third point Respond to comments; the fourth point leads to appendix ABC; the fifth point is to thank the public; the sixth point directly informs the effective date; the seventh point provides the website to query the consultation document and the response letter **. The logic is clear and clear at a glance.
Regarding the opinions harvested, the Hong Kong Securities Regulatory Commission adopted a question-and-answer format to respond directly and positively, and classified and abstracted different opinions from the public according to the style. The biggest impression is that the logical level is very clear, Part 1: Amendment A to the proposed regulatory requirements applicable to operators of licensed virtual asset trading platforms allows retail investors to apply to licensed virtual asset trading platforms:
Question 1 {Do you agree that licensed platform operators should be permitted to provide services to retail investors subject to the proposed appropriate investor safeguards? Please state your opinion}. Point-by-point discussion -- Allowing retail investors to use licensed virtual asset trading platforms (public comments + SFC response) -- Requirements for establishing business relationships with customers (public comments + SFC response) -- Regulation (public comments + SFC response) SFC Response) -- Disclosure Obligations (Public Comments + SFC Response); Question 2 Do you have any comments on the proposed general token inclusion criteria and specific token inclusion criteria? ...(Among them, the Securities Regulatory Commission specifically explained why the 12-month track record of non-security tokens is required to reduce the risk of fraud that is difficult to reasonably detect) and so on.
To sum up, before soliciting public suggestions, the Hong Kong Securities Regulatory Commission specifically lists the core issues that require public opinions and suggestions, and then lists everyone’s opinions when the deadline is up. The difference is Where, what are the basic reasons, and finally the China Securities Regulatory Commission will give its own explanation and a comprehensive balanced result.
The implementation timetable is clear and clear: it will take effect on June 1, 2023, but a transition period arrangement is given to allow existing companies time and opportunity to transform or obtain a license.
The appendix is the full text of the guidelines. The most valuable thing is that the original comments are preserved**, just like we usually use the review function of word documents, the red font prompts where and how to modify, what is the original text, and even includes footnotes and formatting changes. From these revision traces, scholars can deduce the thinking and value orientation of the regulatory authorities, and market players can clearly know that some behaviors have been marked with red lines, and some behaviors are outside the red line.
Sister Sa's team sorted out the most important issues in the virtual asset consulting summary for virtual asset trading platform operators and mainland investors, and made a brief summary here for readers.
Allow licensed virtual asset platforms to provide services to retail investors
Under the current system in Hong Kong, according to the requirements of the Securities and Futures Ordinance, licensed virtual asset trading platforms can only provide services to professional investors. In recent years, voices in and out of Hong Kong have been working to break this restriction. Hong Kong SFC is also The previous "Consultation Document" specifically solicited public opinions on this matter, *that is, "under the premise of taking appropriate investor protection measures, should licensed platform operators be allowed to provide corresponding services to investors?" *
In this "Virtual Asset Consultation Summary", SFC sorted out the responses, and most of the respondents believed that: if the licensed virtual asset trading platform provides investors with relevant knowledge training, venture capital, information disclosure and other safeguard measures Under the premise, retail investors (so-called "retail investors") may be allowed to use licensed virtual asset trading platforms.
Accordingly, the SFC responded: ** will implement the proposal to allow licensed virtual asset trading platforms to provide services to retail investors. However, licensed virtual asset trading platforms should comply with a series of safeguards to protect the interests of retail investors. Highlights of these safeguards include:**
1. Do a good job of KYC work such as risk tolerance assessment
Before providing services to retail investors, corresponding knowledge and risk assessment and investor training should be carried out, and the risk limit should be established. SFC stated that it has considered the proposal to relax the relationship with retailers in some cases, but in the end SFC determined that retail investors are generally unlikely to understand the terms, characteristics and risks of virtual assets, and the purchase and sale of virtual asset trading platforms are carried out automatically. Even if a certain transaction is inappropriate, the virtual asset trading platform has no ability to intervene. Therefore, when the virtual asset trading platform establishes business contacts with retail customers, it is extremely important to ensure suitability. Only by fully implementing the above-mentioned KYC regulations can we To achieve the purpose of protecting the interests of retail investors,** Therefore, even if retail customers have knowledge of virtual assets, virtual asset trading platforms are no longer exempt from risk tolerance assessment. Similarly, the SFC has determined that individual professional investors should enjoy protections comparable to retail investors, given that the requirements for establishing business relationships with clients are designed in the spirit of suitability. **
2. Fulfill the responsibility of information disclosure
In the "Consultation Document", most respondents believed that imposing disclosure obligations on various virtual assets included in virtual asset trading platforms is essential to protect the interests of investors. SFC also responded to this. In the Summary of Asset Consultation, SFC admitted that due to the unique nature of virtual assets, which are different from traditional securities, the regulation of virtual assets is not carried out at the product level, and they are traded on multiple platforms at the same time. and verification of information may be difficult, **Nevertheless, virtual asset trading platforms must conduct due diligence on each virtual asset before including it for sale, and platform operators should obtain information about each virtual asset (whether it is directly or indirectly), requiring platform operators to take all reasonable steps to ensure that the information disclosed about a particular product is not false, biased, misleading or deceptive. **
Virtual asset trading platform should have insurance or compensation arrangements for custody of client funds
In response to this issue, SFC has widely solicited opinions from the public in the "Consultation Document", that is, should licensed virtual asset trading platforms have insurance or compensation arrangements for risks related to custody of client assets? Out of the consideration of ensuring the safety of investors' funds, most of the respondents have a positive opinion on this. However, some respondents pointed out that allocating funds for insurance and compensation arrangements may lead to high capital costs for virtual asset trading platforms and affect the competitiveness of virtual asset trading platforms. **Based on the above considerations, some compromise views believe that the risks involved in customer virtual assets held in offline storage are relatively low, and it is not necessary to obtain comprehensive protection, but only online storage should be protected.
Regarding the above debates, SFC made the following arrangements in this "Virtual Asset Consultation Summary":
1. There will be different protection thresholds for online and offline storage methods
In short, there is room for lowering the protection threshold for holding customer virtual assets in offline storage. SFC believes that the risk of holding customer virtual assets in offline storage is similar to the risk of custody of customer assets in traditional financial markets ( Such as misappropriation and fraud by employees), so there is room for lowering the protection threshold for holding customer-related virtual assets in offline storage. Because the risks associated with holding client virtual assets online and in other storage are not those typically associated with custody of client assets in traditional financial markets,** the SFC determined that client virtual assets held online and in other storage should be fully covered. Compensation guarantee arrangements for branded virtual asset trading platforms. **
2. The virtual asset trading platform can flexibly adopt the guarantee form
Regarding the issue of what form of protection should be adopted by virtual asset trading platforms, SFC also determined in the "Virtual Asset Consultation Summary" that **licensed virtual asset trading platforms can individually or jointly set up a fund pool in the form of an insurer to Provide protection against loss of client assets. The "Virtual Asset Trading Platform Guidelines" have provided for the above flexibility. **
A majority of respondents supported the AML/CFT requirements incorporated in the AML Guidelines and recognized that they would reduce the ML/CFT risks associated with virtual assets. In response to doubts about the transfer, return, and cross-border agency of virtual assets, SFC made further clarifications in the Consultation Document.
1Implement the transfer principle
According to the money transfer principles provided in the "Guidelines on Combating Money Laundering", a licensed virtual asset trading platform (i) when acting as a remittance institution, must obtain, hold and immediately and safely submit the relevant remittance to the beneficiary institution and (ii) while acting as a collection agency, obtain and hold required information from the collection agency. This will provide information for SFC to conduct sanctions screening and transaction monitoring, and help prevent and detect virtual asset transfers to criminals and designated persons.
Regarding the respondents' doubts that the existing technology is not enough to enable them to strictly follow the transfer rules, after considering the implementation status of other major jurisdictions, SFC believes that if the required information cannot be submitted to the collection agency immediately, licensed virtual assets Trading platforms should adopt interim measures to submit required materials to the extent practicable by January 1, 2024. Specific regulatory requirements will be listed in the subsequent FAQs. **
2Transfers from non-custodial wallets
The SFC has stricter control over the transfers of non-custodial wallets, requiring licensed virtual asset trading platforms to take reasonable measures based on risks, such as obtaining the required information from customers and conducting sanctions screening. In addition, licensed virtual asset trading platforms should only accept and assess as reliable non-custodial wallets after taking into account the screening results on virtual asset transactions and related wallet addresses, as well as the assessment results on ownership or control of non-custodial wallets transfers of virtual assets.
3Return of virtual assets
To mitigate the money laundering/terrorist financing risks involved in inward virtual asset transfers without the required documentation, the SFC has decided that **licensed virtual asset trading platforms should only be involved in appropriate circumstances and without money laundering/terrorist financing activities When there is suspicion, and after considering the due diligence of the virtual asset transfer counterparty and the results of screening the virtual asset transaction and the associated wallet address, the virtual asset is returned. **In addition, the virtual assets should be returned to the account of the remittance institution, not the account of the remitter.
4Cross-border agent
When a licensed virtual asset trading platform, in the course of providing virtual asset services (i.e. operating a virtual asset exchange) as defined in section 53ZR of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, acts for relevant customers located outside Hong Kong When a virtual asset service provider or financial institution provides services, the regulations on cross-border agency relationship apply to the platform. This includes situations where licensed virtual asset trading platforms execute transactions for buying and selling virtual assets for these institutions, but does not include situations where virtual asset transfers are conducted with these institutions. In addition, the SFC requires licensed virtual asset trading platforms to continuously monitor virtual asset transactions and related wallet addresses to more timely and accurately identify the source and destination of virtual assets, and any involvement or subsequent involvement in illegal or suspicious activities/ The wallet address associated with the source or designated person.
DISCIPLINARY FINES
Under the SFC Disciplinary Penalty Guidelines, SFC may impose a penalty not exceeding HK$10 million, or three times the amount of profits gained or losses avoided, whichever is higher, There is no automatic linking of fines to the amount of profits achieved or losses avoided. As for the respondents' concerns about the exact amount of fines and considerations, the SFC will adopt fine guidelines consistent with the Securities and Futures Ordinance. **SFC does not automatically link the amount of the fine to the amount of profit achieved or loss avoided. Instead, SFC will respond flexibly to changes in the market by determining relevant factors in determining fines on a case-by-case basis, such as the nature, character, and potential for multiple culpable acts or culpable omissions of the misconduct. **In determining whether disciplinary action should be taken against an individual and/or company, the SFC will consider the conduct of the company and the individual and, in the case of a person involved in the management of the company, whether the conduct involved that person's consent, connivance, or neglect, and failure in the supervision or management of the business.
Write at the end
This "Virtual Asset Consultation Summary" shows that the Hong Kong government is striving to pursue a dynamic balance between supporting virtual asset trading platform practitioners and protecting the interests of virtual asset investors. Designing the obligations that practitioners of virtual currency trading platforms should fulfill, and on this basis, fully consider protecting the interests of retail investors such as "retail investors" and promoting the long-term stable development of the financial market. The establishment of this mechanism also provides a sense of security for investors outside Hong Kong to invest in Hong Kong’s virtual currency market. **Sa Jie’s team still adheres to the previous point of view, that is, Hong Kong and mainland China present “complementary” characteristics in the field of virtual asset development , this complementary feature may become more significant in the future. **SFC's prudent response to the public's move to be dominated by licensed virtual platforms, supervised by SFC, the feasibility of retail investors entering the game, and the sustainability of security also indicates that SFC is trying to establish a set of transparent and A highly operable mechanism is a big step to help Greater China enter the Web3.0 era. This will not only promote the development of the digital economy, but also greatly enhance the vitality and competitiveness of the Greater China market.
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The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
Interpretation of Hong Kong's "Virtual Asset Consultation Summary", can mainland retail investors enter the market?
Written by: Sister Sa Team
On the afternoon of May 23, 2023, Beijing time, the Securities and Futures Commission of the Hong Kong Special Administrative Region (SECURITIES AND FUTURES COMMISSION, hereinafter referred to as the Hong Kong Securities Regulatory Commission) issued the "About the Operation of Virtual Asset Trading Platforms Applicable and Licensed by the Securities and Futures Practice Commission". "Consultation Summary of Regulatory Regulations Suggested by Authors" (hereinafter referred to as the "Consultation Summary of Virtual Assets"), **shows the Hong Kong Special Administrative Region's open attitude and regulatory thinking towards virtual asset transactions, and gives a complete response to the suggestions made by the public. The process is transparent and clear, which is impressive. **
File directory, very impressive
In terms of style, the Hong Kong Securities Regulatory Commission’s virtual asset consultation summary is divided into four parts: summary, comments and responses from the Securities and Futures Commission, implementation timetable, and appendix (the appendix includes the final version with a revised mark).
The abstract, at first glance, looks a lot like the "abstract" in an academic paper. Its purpose is to allow readers who are unfamiliar with this field or readers who are in a hurry to quickly grasp the problems and ideas to be solved in the document. Unlike the abstract of an academic paper, which is a condensed text, the abstract written by the Hong Kong Securities Regulatory Commission marked 7 points. **The first point is the source of law; the second point is to clarify the deadline for consultation and the number of copies to receive opinions; the third point Respond to comments; the fourth point leads to appendix ABC; the fifth point is to thank the public; the sixth point directly informs the effective date; the seventh point provides the website to query the consultation document and the response letter **. The logic is clear and clear at a glance.
Regarding the opinions harvested, the Hong Kong Securities Regulatory Commission adopted a question-and-answer format to respond directly and positively, and classified and abstracted different opinions from the public according to the style. The biggest impression is that the logical level is very clear, Part 1: Amendment A to the proposed regulatory requirements applicable to operators of licensed virtual asset trading platforms allows retail investors to apply to licensed virtual asset trading platforms:
Question 1 {Do you agree that licensed platform operators should be permitted to provide services to retail investors subject to the proposed appropriate investor safeguards? Please state your opinion}. Point-by-point discussion -- Allowing retail investors to use licensed virtual asset trading platforms (public comments + SFC response) -- Requirements for establishing business relationships with customers (public comments + SFC response) -- Regulation (public comments + SFC response) SFC Response) -- Disclosure Obligations (Public Comments + SFC Response); Question 2 Do you have any comments on the proposed general token inclusion criteria and specific token inclusion criteria? ...(Among them, the Securities Regulatory Commission specifically explained why the 12-month track record of non-security tokens is required to reduce the risk of fraud that is difficult to reasonably detect) and so on.
To sum up, before soliciting public suggestions, the Hong Kong Securities Regulatory Commission specifically lists the core issues that require public opinions and suggestions, and then lists everyone’s opinions when the deadline is up. The difference is Where, what are the basic reasons, and finally the China Securities Regulatory Commission will give its own explanation and a comprehensive balanced result.
The implementation timetable is clear and clear: it will take effect on June 1, 2023, but a transition period arrangement is given to allow existing companies time and opportunity to transform or obtain a license.
The appendix is the full text of the guidelines. The most valuable thing is that the original comments are preserved**, just like we usually use the review function of word documents, the red font prompts where and how to modify, what is the original text, and even includes footnotes and formatting changes. From these revision traces, scholars can deduce the thinking and value orientation of the regulatory authorities, and market players can clearly know that some behaviors have been marked with red lines, and some behaviors are outside the red line.
Sister Sa's team sorted out the most important issues in the virtual asset consulting summary for virtual asset trading platform operators and mainland investors, and made a brief summary here for readers.
Allow licensed virtual asset platforms to provide services to retail investors
Under the current system in Hong Kong, according to the requirements of the Securities and Futures Ordinance, licensed virtual asset trading platforms can only provide services to professional investors. In recent years, voices in and out of Hong Kong have been working to break this restriction. Hong Kong SFC is also The previous "Consultation Document" specifically solicited public opinions on this matter, *that is, "under the premise of taking appropriate investor protection measures, should licensed platform operators be allowed to provide corresponding services to investors?" *
In this "Virtual Asset Consultation Summary", SFC sorted out the responses, and most of the respondents believed that: if the licensed virtual asset trading platform provides investors with relevant knowledge training, venture capital, information disclosure and other safeguard measures Under the premise, retail investors (so-called "retail investors") may be allowed to use licensed virtual asset trading platforms.
Accordingly, the SFC responded: ** will implement the proposal to allow licensed virtual asset trading platforms to provide services to retail investors. However, licensed virtual asset trading platforms should comply with a series of safeguards to protect the interests of retail investors. Highlights of these safeguards include:**
1. Do a good job of KYC work such as risk tolerance assessment
Before providing services to retail investors, corresponding knowledge and risk assessment and investor training should be carried out, and the risk limit should be established. SFC stated that it has considered the proposal to relax the relationship with retailers in some cases, but in the end SFC determined that retail investors are generally unlikely to understand the terms, characteristics and risks of virtual assets, and the purchase and sale of virtual asset trading platforms are carried out automatically. Even if a certain transaction is inappropriate, the virtual asset trading platform has no ability to intervene. Therefore, when the virtual asset trading platform establishes business contacts with retail customers, it is extremely important to ensure suitability. Only by fully implementing the above-mentioned KYC regulations can we To achieve the purpose of protecting the interests of retail investors,** Therefore, even if retail customers have knowledge of virtual assets, virtual asset trading platforms are no longer exempt from risk tolerance assessment. Similarly, the SFC has determined that individual professional investors should enjoy protections comparable to retail investors, given that the requirements for establishing business relationships with clients are designed in the spirit of suitability. **
2. Fulfill the responsibility of information disclosure
In the "Consultation Document", most respondents believed that imposing disclosure obligations on various virtual assets included in virtual asset trading platforms is essential to protect the interests of investors. SFC also responded to this. In the Summary of Asset Consultation, SFC admitted that due to the unique nature of virtual assets, which are different from traditional securities, the regulation of virtual assets is not carried out at the product level, and they are traded on multiple platforms at the same time. and verification of information may be difficult, **Nevertheless, virtual asset trading platforms must conduct due diligence on each virtual asset before including it for sale, and platform operators should obtain information about each virtual asset (whether it is directly or indirectly), requiring platform operators to take all reasonable steps to ensure that the information disclosed about a particular product is not false, biased, misleading or deceptive. **
Virtual asset trading platform should have insurance or compensation arrangements for custody of client funds
In response to this issue, SFC has widely solicited opinions from the public in the "Consultation Document", that is, should licensed virtual asset trading platforms have insurance or compensation arrangements for risks related to custody of client assets? Out of the consideration of ensuring the safety of investors' funds, most of the respondents have a positive opinion on this. However, some respondents pointed out that allocating funds for insurance and compensation arrangements may lead to high capital costs for virtual asset trading platforms and affect the competitiveness of virtual asset trading platforms. **Based on the above considerations, some compromise views believe that the risks involved in customer virtual assets held in offline storage are relatively low, and it is not necessary to obtain comprehensive protection, but only online storage should be protected.
Regarding the above debates, SFC made the following arrangements in this "Virtual Asset Consultation Summary":
1. There will be different protection thresholds for online and offline storage methods
In short, there is room for lowering the protection threshold for holding customer virtual assets in offline storage. SFC believes that the risk of holding customer virtual assets in offline storage is similar to the risk of custody of customer assets in traditional financial markets ( Such as misappropriation and fraud by employees), so there is room for lowering the protection threshold for holding customer-related virtual assets in offline storage. Because the risks associated with holding client virtual assets online and in other storage are not those typically associated with custody of client assets in traditional financial markets,** the SFC determined that client virtual assets held online and in other storage should be fully covered. Compensation guarantee arrangements for branded virtual asset trading platforms. **
2. The virtual asset trading platform can flexibly adopt the guarantee form
Regarding the issue of what form of protection should be adopted by virtual asset trading platforms, SFC also determined in the "Virtual Asset Consultation Summary" that **licensed virtual asset trading platforms can individually or jointly set up a fund pool in the form of an insurer to Provide protection against loss of client assets. The "Virtual Asset Trading Platform Guidelines" have provided for the above flexibility. **
Anti-Money Laundering / Terrorist Financing Matters
A majority of respondents supported the AML/CFT requirements incorporated in the AML Guidelines and recognized that they would reduce the ML/CFT risks associated with virtual assets. In response to doubts about the transfer, return, and cross-border agency of virtual assets, SFC made further clarifications in the Consultation Document.
1Implement the transfer principle
According to the money transfer principles provided in the "Guidelines on Combating Money Laundering", a licensed virtual asset trading platform (i) when acting as a remittance institution, must obtain, hold and immediately and safely submit the relevant remittance to the beneficiary institution and (ii) while acting as a collection agency, obtain and hold required information from the collection agency. This will provide information for SFC to conduct sanctions screening and transaction monitoring, and help prevent and detect virtual asset transfers to criminals and designated persons.
Regarding the respondents' doubts that the existing technology is not enough to enable them to strictly follow the transfer rules, after considering the implementation status of other major jurisdictions, SFC believes that if the required information cannot be submitted to the collection agency immediately, licensed virtual assets Trading platforms should adopt interim measures to submit required materials to the extent practicable by January 1, 2024. Specific regulatory requirements will be listed in the subsequent FAQs. **
2Transfers from non-custodial wallets
The SFC has stricter control over the transfers of non-custodial wallets, requiring licensed virtual asset trading platforms to take reasonable measures based on risks, such as obtaining the required information from customers and conducting sanctions screening. In addition, licensed virtual asset trading platforms should only accept and assess as reliable non-custodial wallets after taking into account the screening results on virtual asset transactions and related wallet addresses, as well as the assessment results on ownership or control of non-custodial wallets transfers of virtual assets.
3Return of virtual assets
To mitigate the money laundering/terrorist financing risks involved in inward virtual asset transfers without the required documentation, the SFC has decided that **licensed virtual asset trading platforms should only be involved in appropriate circumstances and without money laundering/terrorist financing activities When there is suspicion, and after considering the due diligence of the virtual asset transfer counterparty and the results of screening the virtual asset transaction and the associated wallet address, the virtual asset is returned. **In addition, the virtual assets should be returned to the account of the remittance institution, not the account of the remitter.
4Cross-border agent
When a licensed virtual asset trading platform, in the course of providing virtual asset services (i.e. operating a virtual asset exchange) as defined in section 53ZR of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, acts for relevant customers located outside Hong Kong When a virtual asset service provider or financial institution provides services, the regulations on cross-border agency relationship apply to the platform. This includes situations where licensed virtual asset trading platforms execute transactions for buying and selling virtual assets for these institutions, but does not include situations where virtual asset transfers are conducted with these institutions. In addition, the SFC requires licensed virtual asset trading platforms to continuously monitor virtual asset transactions and related wallet addresses to more timely and accurately identify the source and destination of virtual assets, and any involvement or subsequent involvement in illegal or suspicious activities/ The wallet address associated with the source or designated person.
DISCIPLINARY FINES
Under the SFC Disciplinary Penalty Guidelines, SFC may impose a penalty not exceeding HK$10 million, or three times the amount of profits gained or losses avoided, whichever is higher, There is no automatic linking of fines to the amount of profits achieved or losses avoided. As for the respondents' concerns about the exact amount of fines and considerations, the SFC will adopt fine guidelines consistent with the Securities and Futures Ordinance. **SFC does not automatically link the amount of the fine to the amount of profit achieved or loss avoided. Instead, SFC will respond flexibly to changes in the market by determining relevant factors in determining fines on a case-by-case basis, such as the nature, character, and potential for multiple culpable acts or culpable omissions of the misconduct. **In determining whether disciplinary action should be taken against an individual and/or company, the SFC will consider the conduct of the company and the individual and, in the case of a person involved in the management of the company, whether the conduct involved that person's consent, connivance, or neglect, and failure in the supervision or management of the business.
Write at the end
This "Virtual Asset Consultation Summary" shows that the Hong Kong government is striving to pursue a dynamic balance between supporting virtual asset trading platform practitioners and protecting the interests of virtual asset investors. Designing the obligations that practitioners of virtual currency trading platforms should fulfill, and on this basis, fully consider protecting the interests of retail investors such as "retail investors" and promoting the long-term stable development of the financial market. The establishment of this mechanism also provides a sense of security for investors outside Hong Kong to invest in Hong Kong’s virtual currency market. **Sa Jie’s team still adheres to the previous point of view, that is, Hong Kong and mainland China present “complementary” characteristics in the field of virtual asset development , this complementary feature may become more significant in the future. **SFC's prudent response to the public's move to be dominated by licensed virtual platforms, supervised by SFC, the feasibility of retail investors entering the game, and the sustainability of security also indicates that SFC is trying to establish a set of transparent and A highly operable mechanism is a big step to help Greater China enter the Web3.0 era. This will not only promote the development of the digital economy, but also greatly enhance the vitality and competitiveness of the Greater China market.