Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), has recently announced an updated regulatory framework for digital asset fund managers in a document spanning 37 pages titled ‘Proforma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets’.

Addressing Illicit Funding Issues

Among the rules, regulations and guidance outlines for digital asset fund managers, the SFC included requirements that fund managers must follow to prevent illegal activities which may occur from digital asset transactions such as money laundering and terrorism funding. 

As for the custody of digital assets, the SFC stated that fund managers must choose independent custodians for their clients’ assets in order to ensure the safety and security of investors’ assets. 

Meanwhile, fund managers are required to perform due diligence on the security of custody solutions, such as assessing the quality of hardware and software.

Tighter Regulations for Digital Assets

According to the new rules, once a fund manager receives fiat currency from a client, the funds must be stored separately from any other clients’ funds. Moreover, bank accounts storing fiat currency should belong to a licensed financial institution based in Hong Kong.

Additionally, digital asset fund managers based in Hong Kong are required to ensure they have a minimum liquid capital of 3 million Hong Kong Dollars (approximately US$383,000), as well as its variable required liquid capital.

Hong Kong is recognized as a leading jurisdiction with a massive number of licensed cryptocurrency exchanges operating from the financial hub.

Previously in March, the SFC had published a guidance on security tokens in order to set out a regulatory framework for digital assets.

Source: https://thetokenist.io

About Asia Blockchain Review

Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. It aims to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.

Our goal is to cultivate and encourage a collaborative community for our members to gather, share their experiences and endeavors in the blockchain space, and brainstorm the potential uses of blockchain technology.

Follow Asia Blockchain Review on:

• Telegram: https://t.me/asiablockchainreview
• Facebook: https://www.facebook.com/pg/asiablockchainreview
• Twitter: https://twitter.com/abr_blockchain
• LinkedIn: https://www.linkedin.com/company/asia-blockchain-review/
• Website: https://www.asiablockchainreview.com/
• Email: [email protected]
• Youtube: https://www.youtube.com/channel/UCMQ5CVu0c9-pMlwB8LUvkiA