Hong Kong Securities Industry Group Opposes Tightening Crypto Asset Management License Rules

Odaily Planet Daily News: The Hong Kong Securities and Futures Professionals Association (HKSFPA) has submitted comments to regulators regarding Hong Kong’s proposed digital asset management regulatory framework, opposing several tightening measures.

HKSFPA mainly opposes the removal of the current “de minimis” arrangement. Under the current rules, institutions holding a Type 9 license (Asset Management) can, after reporting to regulators, allocate up to 10% of their total fund assets into cryptocurrencies without needing an additional virtual asset management license. The proposed plan aims to eliminate this limit, meaning even allocating just 1% to Bitcoin would require a full virtual asset management license.

HKSFPA pointed out that the “all-or-nothing” regulatory approach is disproportionate and could lead to significant compliance costs with limited risk exposure, potentially discouraging traditional asset management firms from entering the crypto space.

Additionally, HKSFPA objected to the proposed custody requirements. The relevant proposal mandates that virtual asset managers can only use licensed custodians registered with the SFC for asset custody. The association stated that this requirement is impractical in early-stage token investments and Web3 venture capital, and could restrict local Hong Kong institutions from engaging in related activities.

At the same time, HKSFPA expressed support for allowing self-custody and the use of qualified offshore custodians when serving professional investors.

Reports indicate that the above regulatory suggestions are now in the implementation stage. Hong Kong authorities have previously released a consultation summary on the related plans and are conducting a new round of consultation on licensing systems for crypto trading, advisory, and management services. (The Block)