The Hong Kong Monetary Authority (HKMA) has lately revealed two detailed steering letters to all approved 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 the direction of harmonizing the quickly rising tokenization space with the present monetary practices and worldwide norms.
HKMA’s Tokenization and Custody Standards
One of the 2 letters addresses the depositary operate of digital property, demanding AIs observe the standards that align with the worldwide finest practices in administration. These standards cowl eight important elements, governance, danger administration, and asset segregation.
The HKMA stresses that the senior administration and workers concerned in custody ought to have the required expertise for their duties to be carried out effectively.
Additionally, 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 method is meant to make the custodian companies of the establishments robust, secure, and customer-friendly.
Tokenized Products Regulations and Consequences
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 traders.
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 apply 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 companies but additionally specific the authority’s pleasant perspective in the 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 setting the place digital asset innovation is promoted and on the identical time, investor safety and market integrity are maintained.
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The introduced content material could embrace the non-public opinion of the creator and is topic to market situation. Do your market analysis earlier than investing in cryptocurrencies. The creator or the publication doesn’t maintain any duty for your private monetary loss.
