A seminar recently held by the Association of Fund Administrators of Hong Kong and the Greater Bay Area focused on raising understanding around regulatory compliance within the digital asset sector. Over 150 participants attended the event, which featured a keynote address by the Executive Director of Intermediaries from the Securities and Futures Commission (SFC). The discussions at the seminar underlined the importance of collaboration in the fund industry to better enhance technical capabilities and compliance with regulations while leveraging new technologies in fund management.
In a notable development, several prominent Chinese technology companies have decided to temporarily suspend their plans to issue stablecoins in Hong Kong. This halt follows regulatory concerns from mainland authorities regarding privately controlled digital currencies. The People’s Bank of China and the Cyberspace Administration of China directed these companies to pause their initiatives, demonstrating the caution of Chinese regulators amid Hong Kong’s emerging efforts in stablecoin and tokenization.
The seminar hosted by the SFC highlighted key topics around risk management and control measures specifically designed for digital asset funds and tokenized funds. Risk management is crucial in the finance sector, especially given the increasingly regulated environment across asset classes. The emphasis during discussions was placed on the necessity for unified efforts within the industry to address regulatory compliance and technical standards.
The event also coincided with China’s evolving stance on digital currencies. The country is now allowing certain fiat-referenced stablecoins to facilitate the international utilization of its currency, the renminbi (RMB). Despite significant capital controls in mainland China and the previous ban on cryptocurrencies, Hong Kong has emerged as an experimental ground for stablecoin licensing, thereby positioning itself as a potential center for tokenized financial products.
Data indicates a marked increase in RMB settlements, further promoting the currency’s role in cross-border transactions. Trading increasingly settled in RMB due to apprehensions about the impact of potential sanctions on the Chinese financial system.
The current regulatory landscape is seen as balancing innovation while maintaining oversight, as evidenced by both the SFC’s seminar and the recent regulatory hesitance regarding private stablecoins from mainland authorities. The licensing regime enacted in Hong Kong for stablecoin issuance aims to underline this balance and solidifies the city’s position as a forward-thinking hub for the development of digital asset products.
With ongoing discussions emphasizing cooperation, the seminar provided an important platform for stakeholders in the fund management industry to identify shared challenges and promote a unified approach to regulatory adherence and the adoption of emerging financial technologies.