The Hong Kong Securities and Futures Professionals Association has called on the Securities and Futures Commission (SFC) to adjust its regulatory framework for virtual assets. The association seeks to reduce compliance costs, enhance the Virtual Asset Platform Practitioner Examination (CVAP), and provide clearer regulations across various issues.
Proposed Changes to CVAP
This appeal followed discussions between the association and officials from Hong Kong's financial regulatory bodies, including Under Secretary for Financial Services and the Treasury Chan Ho-lim. The SFC has indicated a willingness to modify the CVAP qualification process, suggesting separation of the examination from mandatory coursework, the provision of official study materials, and a decrease in examination fees. Additionally, candidates may eventually have the option to take the exam without completing the required training courses.
Continuing Regulatory Discussions
Despite the constructive conversations, unresolved issues persist. Key topics still under discussion involve self-custody regulations for private equity funds, regulations pertaining to virtual asset payments, and the classification between technology providers and regulated financial activities. The association has expressed concerns that the current regulatory environment is overly broad, complicating the operational landscape for firms entering the sector. Furthermore, industry representatives have highlighted the elimination of the previous 10% minimum investment exemption as problematic.
Challenges in Compliance
The implementation of new rules has begun to affect market participants, as many aspects of licensing requirements and permissible business activities remain unclear. Licensed virtual asset platform operators are reporting increased compliance costs. The association has urged the SFC to consider a more flexible approach by reviewing guidelines on cold and hot wallet allocations, insurance, hardware encryption, and procedures for on-chain transfers. Such adjustments, they argue, would assist licensed platforms in remaining competitive while ensuring investor protection.
The association's feedback outlines that reducing operational burdens would benefit the overall market in Hong Kong, fostering a more robust and dynamic virtual asset ecosystem.
Regulatory Clarity Needed
Another significant area of concern is the regulatory stance towards technology firms that support the digital asset sector. The association has requested clearer definitions and guidelines, emphasizing the importance of distinguishing between technology providers and entities engaged in regulated financial activities.
