HK SFC CEO Spotlights China’s ‘One Country, Two Systems’ Model

The Hong Kong (HK) Securities and Futures Commission (SFC) CEO Julia Leung Fung-yee has reportedly stated that Hong Kong’s virtual asset ecosystem requires bringing virtual asset service providers (VASPs) under the purview of regulation. The SFC CEO asserted that while mainland China has banned cryptocurrencies, Hong Kong’s cryptocurrency licensing system signals China’s “one country, two systems” model.

As per the SFC CEO, the goal of the virtual asset ecosystem of Hong Kong is not to make Hong Kong a cryptocurrency trading hub,” but acknowledges crypto as a vital part of the virtual asset ecosystem. Fung-yee added that after the FTX fiasco, pro-crypto jurisdictions started to introduce tougher regulations. The SFC CEO reasoned that following a cold winter in the cryptocurrency market in 2022, instances of default or bankruptcy of some VASP companies occurred.

Chinese reporter Colin Wu took to Twitter to share insights on the VASP statement by Hong Kong SFC CEO on his Twitter page Wu Blockchain:

Further, Fung-yee asserted that while the risk could potentially “spill over to the entire industry,” the volatile encrypted assets and the huge losses risk have shaken investor confidence, warranting VASP’s inclusion into the regulatory system.

Julia Leung spoke at the administrative dinner organized jointly by the Bangkok-based Hong Kong Economic and Trade Office (HKETO), the Office of the Introduction of Key Enterprises (OIKE), and the Investment Promotion Agency (IPA). The SFC CEO clarified that the new licensing system of the SFC’s VASPs is expected to come into force this month.

As per the SFC CEO, the regulatory framework is stated to fully deal with the public and all aspects pertaining to virtual assets’ interaction, to protect investors, and manage risks that financial institutions encounter. CEO Leung noted that over the years, Hong Kong‘s virtual assets supervision has been “transparent, consistent, and predictable.”