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Hong Kong Securities Body Pushes Back On Tighter Crypto Licensing Rules

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The Hong Kong securities business is pushing again in opposition to a plan that might tighten the online round crypto publicity inside conventional portfolios, arguing town dangers scaring off mainstream asset managers simply because it tries to construct a deeper digital-asset market.

In a submission dated Tuesday, the Hong Kong Securities and Futures Professionals Association urged regulators to maintain a long-standing “de minimis” carve-out for Type 9 licensed asset managers, warning that scrapping it might flip even tiny allocations right into a full licensing set off.

Type 9 is Hong Kong’s commonplace licence for discretionary portfolio managers, the permission most conventional fund managers maintain to run shopper cash beneath the SFC’s guidelines.

Proposed Rule Would Scrap 10% Crypto Threshold

Under as we speak’s uplifted regime, Type 9 managers can make investments lower than 10% of a fund’s gross asset worth in digital belongings with out searching for a separate digital asset administration licence, so long as they notify the Securities and Futures Commission. The proposal beneath session would take away that threshold.

The business group mentioned the change successfully forces an “all-or-nothing” choice for companies that need to take a look at crypto as a diversifier.

“This ‘all-or-nothing’ method is disproportionate,” it wrote, including that it might impose main compliance prices even when danger publicity stays restricted.

It additionally urged regulators to convey the carve-out again in a transparent, risk-based kind. “We strongly suggest reinstating a de minimis exemption,” the affiliation mentioned, arguing that managers beneath a set threshold ought to face a notification requirement somewhat than the complete digital asset administration regime.

The submission lands amid Hong Kong’s broader effort to widen its digital-asset rulebook. The Financial Services and the Treasury Bureau and the SFC published consultation conclusions in December on licensing for digital asset dealing providers, they usually opened an additional public session on proposed licensing regimes for digital asset advisory and administration service suppliers.

Licensing Expansion Aims To Match Institutional Growth

Custody guidelines have turn into one other stress level. The affiliation criticized proposals that might require digital asset managers to make use of solely SFC-licensed custodians, saying the mandate might show unworkable for personal fairness and enterprise funds that purchase early-stage tokens that native custodians don’t but assist.

Hong Kong’s regulators have pitched the brand new licensing structure as a part of a push to convey extra exercise onshore, whereas tightening requirements as institutional participation grows. Officials have additionally signalled they need a framework that may plug into current regulated exercise, somewhat than leaving crypto publicity to advert hoc interpretations.

The debate issues as a result of it goes to how rapidly conventional finance joins the commerce. Keeping a ten% carve-out makes it simpler for inventory and bond managers so as to add a small sleeve of Bitcoin or different tokens, whereas elimination raises the bar to a full licence even for experimentation, creating a better mounted value earlier than companies see significant demand.

Hong Kong has tried to stability that stress by increasing licensing whereas additionally smoothing market plumbing in different areas, together with steps geared toward bettering liquidity at regulated digital asset buying and selling platforms.

Regulators haven’t finalised the advisory and administration proposals, and the present session course of is designed to assemble suggestions earlier than legislative work strikes ahead. The authorities has mentioned it plans to refine proposals and take laws to town’s legislature in 2026.

The submit Hong Kong Securities Body Pushes Back On Tighter Crypto Licensing Rules appeared first on Cryptonews.

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