Hong Kong Securities and Futures Commission Chief Executive Leung Fengyi: Unregulated parts of the virtual asset ecosystem should consider regulation

The Hong Kong government recently stated that it is considering establishing a system to regulate over-the-counter exchanges (OTC) of virtual assets. Hong Kong Securities and Futures Commission Chief Executive Officer Leung Fung-yee said that the suspected fraud case of virtual asset trading platform JPEX highlights the market’s need for a regulatory system that pays attention to investor protection. In particular, supervision of the currently unregulated parts of the ecosystem should be considered. Liang Fengyi said at a forum that the authorities realized from the JPEX incident that many Internet celebrities (KOLs) tried to persuade citizens to buy virtual assets through OTC, and the public also tended to obtain investment advice from KOLs, but KOLs were not unrestricted. According to the Anti-Money Laundering Regulations that came into effect in June this year, no one is allowed to advertise on unauthorized platforms. She believes that the China Securities Regulatory Commission must strengthen supervision and law enforcement, and has established a joint working group on virtual asset trading platforms with the police to exchange information and strengthen international cooperation. She also mentioned that many traditional financial institutions have put forward proposals for asset tokenization. The authorities welcome the relevant pilots, but at the same time believe that the new risks arising from them need to be identified. The Securities and Futures Commission will issue a circular shortly to provide guidance in relevant areas.