Dedicating to Impact Ecosystem Building and Practice

Purpose. Sustainability. Integrity.

New Hong Kong Regulatory Approach to Virtual Assets

The Hong Kong Securities & Futures Commission (SFC) today issued a statement and an accompanying circular setting out a new regulatory approach on virtual assets, referred to as a “digital representation of value” (encompassing “cryptocurrency”, “crypto-assets” or “digital token”).

The statement outlines the SFC’s new measures to regulate investment or portfolio management or distribution of investment products that involve investing in virtual assets, including licensing conditions that could apply irrespective of whether the virtual assets meet the definition of “securities” or “futures contract” (licensing requirements for engaging in type 1 regulated activity of dealing in securities and/or for engaging in type 9 regulated activity of asset management could apply).

It is intended to address risks that virtual assets pose to investors, and to “encourage the responsible use of technologies and also provide investors with better choices and better outcomes”, in the words of Mr Ashley Alder, the SFC’s Chief Executive Officer.

This may be seen as the SFC taking needed cautious measures on a new risky asset class, bringing virtual assets clearly within its regulatory scope.

At the same time, the SFC has introduced a conceptual framework for the potential regulation of virtual asset trading platform operators”. According to the SFC, the new regulatory framework is intended as a “conceptual framework to explore a pathway for compliance for virtual trading platform operators who are willing to be supervised by us”.

As such, the framework could be a welcomed and strategic step for Hong Kong in the growing virtual and digital assets world. The SFC conceptual framework lays down the core principles and expected platform and trading terms and conditions that shall apply, for exploring virtual trading platforms in SFC regulatory sandbox environment.

The key principles include requiring all virtual asset trading activities to be conducted under a single legal entity and compliance with all applicable requirements by the entire virtual asset trading business, and that the services of virtual trading platform operator should be provided only to “professional investors”.

Recently, the SFC has launched a new logo of a soaring eagle, which may suggest a lift-off to a new era, while the SFC emphasises its unceasing vigilance on new risks.

To discuss this subject matter, please contact:

Vivien Teu (Email: vivien.teu@vteu.co; Tel:+852 2969 5316)

Links to:

Statement on regulatory framework for virtual asset portfolio managers, fund distributors and trading platform operators

Circular to intermediaries – Distribution of virtual asset funds

Regulatory Standards for lincensed corporations managing virtual asset portfolios

Conceptual framework for the potential regulation of virtual asset trading platform operators

Share:

Discover More

Contact Us

We would be delighted to discuss how we may assist on any or all of the above with our dedicated practice areas or to help seek solutions. When we are engaged, your goals become our goals to meet, your issues our issues to solve.

Contact us at our general email: enquiry@vteu.co, and we will be in touch shortly.

  • Unit #2002B, 20/F The Centrium, 60 Wyndham Street, Central, Hong Kong
  • Unit 37-2, Level 37, Q Sentral, No. 2A, Jalan Stesen Sentral 2, Kuala Lumpur Kuala Lumpur 50470, Malaysia
  • +852 28862660 / +60 (0)122897276
  • enquiry@vteu.co

For a deeper perspective on Vivien Teu’s journey and earlier contributions, visit the archived website of Vivien Teu & Co LLP at archive.vteu.co. The archive captures the firm’s foundations in corporate and commercial law, with a strong focus on asset management, funds, and financial services in Hong Kong and Greater China. Today, Vivien Teu Law Practice leads with impact focus, with its emphasis and dedication on sustainable finance, ESG integration, impact investing, social finance and philanthropy, reflecting a continued commitment to aligning law and purpose.

Visit the Archive

Vivien Teu is Founder & Principal of Vivien Teu Law Practice / VTLP Impact.  With more than 25 years in-depth experiences in capital markets, financial institutions and asset management industry, financial services, financial and securities regulatory matters, funds formation, investment and finance transactions, Vivien is market leading in her focus on ESG legal and regulatory issues, increasingly integrated into her advisory and transactional practice. She has been active in impact ecosystem building, contributing to standard setting and industry engagements on sustainability, ESG and impact issues and sustainable finance, specifically in the investment and capital markets, holistically covering regulatory, legal and policy perspectives, and advises across the spectrum of capital, ESG issues and asset classes, public and private markets, for-profit, non-profit organisations or hybrid structures, and range of fund structures and financing instruments.

Prior to establishing Vivien Teu Law Practice / VTLP Impact, Vivien has solid industry experience from strategic roles throughout her career, including senior in-house legal experience with global asset management firm, Invesco, and practised with leading international funds and regulatory practice including magic circle law firm Clifford Chance, and most recently with global law firm Dentons, where Vivien assumed key roles as sustainable finance lead on the Global ESG Steering Committee, Global Funds Leaders Group and Global Financial Institutions Practice Group, driving impact focus within mainstream finance and capital markets.  Vivien’s leadership in sustainable finance, global funds and industry engagement is matched with her commitment to community and ecosystem building. 

With the vision of the role of law in purposeful partnerships and projects, to align capital with sustainability and increasing focus on measurable positive environmental and social outcomes, Vivien’s experiences include advising asset owners, asset managers and also charitable foundations in establishing purpose-led initiatives, related stewardship and governance considerations and structure design, B Lab’s legal requirements and certification standards for B Corps, green and sustainable finance frameworks and instruments, legal issues of carbon markets and climate transition, climate mitigation and adaptation strategies and funds, nature-based solutions and finance, impact term-sheets and other innovative finance instruments for impact, advocacy efforts as well as engaging in market proposals for policy, legal and regulatory levers for advancing sustainability and impact.   

 

Learn more about Vivien at LinkedIn