It is very difficult for governments to regulate cryptocurrencies and companies active in this industry. Hong Kong’s SFC acknowledges a careful approach is more than warranted. For the time being, the agency proposes creating a sandbox environment for crypto exchanges. This would allow them to monitor the industry and create new guidelines accordingly.

Numerous countries around the globe seek to regulate the Bitcoin industry. That is a lot easier said than done, as existing guidelines seemingly don’t apply to companies in this space. In Hong Kong, the Securities and Futures Commission is tasked with monitoring the situation. To protect crypto exchanges, they propose a sandbox environment with lenient regulatory guidelines.

A Careful Approach to Bitcoin Regulation

Finding the right balance between regulation and hindrance is not easy. Investors in Hong Kong are flocking to virtual asset trading platforms. All of these companies are unlicensed due to the lack of actual market regulation. Something will need to change to bring more legitimacy to these exchanges moving forward. Licensing conditions appear to be the preferred course of action.

For the time being, the exact guidelines remain unclear. Further exploration of the industry and its active companies is needed. A regulatory sandbox will shield companies from harsh requirements until the official regulation is put into law. The licensing conditions will apply to firms trading both securities and futures contracts alike.

There is no certainty these trading platforms will be subject to regulatory measures. The SFC wants to examine if rules can become applicable. Based on a company’s existing compliance with proposed requirements, a license may need to be obtained in the future. A commendable approach, rather than banning crypto trading altogether.

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About Author

JP Buntinx is a 30-year old FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he is working to achieve the same level of respect in the FinTech sector.

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