The Hong Kong Financial Authority (HKMA) has just lately printed two detailed steerage letters to all licensed establishments (AIs) in its area. By doing so, these communications additionally set the regulatory necessities and requirements for the tokenization and custody of digital property, which represents a big step in direction of harmonizing the quickly rising tokenization space with the prevailing monetary practices and worldwide norms.
HKMA’s Tokenization and Custody Requirements
One of many two letters addresses the depositary perform of digital property, demanding AIs comply with the factors that align with the worldwide greatest practices in administration. These standards cowl eight important features, governance, danger administration, and asset segregation.
The HKMA stresses that the senior administration and workers concerned in custody ought to have the mandatory expertise for his or her duties to be carried out effectively.
Moreover, the letter emphasizes the significance of AIs initiating discussions with the HKMA and demonstrating their adherence to the requirements and necessities as specified. Such a proactive strategy is meant to make the custodian providers of the establishments sturdy, secure, and customer-friendly.
Tokenized Merchandise Rules and Penalties
The second letter offers with the sale and distribution of tokenized products, which aren’t topic to the Securities and Futures Ordinance. It additionally reaffirms that the present oversight necessities and client safety insurance policies that apply to conventional monetary property additionally apply to their tokenized variations.
This refinement ensures that the tokenized merchandise’ important traits, phrases, and dangers are clear and comprehensible to each customers and buyers.
The letter identifies that particular tokenization constructions, such because the division of stake in an asset, could also be termed collective funding schemes. This understanding causes AIs to follow due diligence and make use of full danger administration and disclosure practices when coping with tokenized merchandise.
Market Overview and Developments
The HKMA letters not solely outline the regulatory regime for the tokenization and custody providers but in addition categorical the authority’s pleasant angle in direction of innovation within the monetary sector.
Recognition of the strides made by the trade in tokenization by HKMA is proof of Hong Kong’s dedication to nurturing an atmosphere the place digital asset innovation is promoted and on the similar time, investor safety and market integrity are maintained.
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The offered content material could embrace the private opinion of the writer and is topic to market situation. Do your market analysis earlier than investing in cryptocurrencies. The writer or the publication doesn’t maintain any accountability to your private monetary loss.
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