Xu Zhengyu: Hong Kong's virtual asset OTC trading custody services are expected to be mainly supervised by the Securities and Futures Commission

PANews reported on July 7 that according to Ming Pao, when the Hong Kong Treasury Department consulted the public on virtual asset over-the-counter (OTC) transactions last year, it proposed that the Commissioner of Customs and Excise issue licenses and that the Customs and Excise Department regulate virtual asset OTC services. Hong Kong Treasury Secretary Paul Chan explained that when the OTC was proposed to be regulated by the Customs, some Legislative Council members expressed different opinions, including concerns about regulatory arbitrage. Later, it was found that the market operation model was more complicated than originally imagined. Some OTC institutions not only operated OTC services but also provided custody services. Therefore, they hoped to centrally regulate related transactions. Now the Hong Kong Securities and Futures Commission is defined as the main regulator. If the (service) involves banks at that time, the HKMA will be the front-line regulator.

Xu Zhengyu also added that regardless of whether virtual asset service providers will eventually be treated as licensed, full expectations will be given to ensure that there are sufficient regulatory and other resources to process license applications.