In about one week, The Tokenizer launches the world’s first AI-powered regulatory GPT – or RegGPT – designed specifically to cover the space of asset tokenization and digital assets.
The RegGPT will be an integrated part of The Tokenizer’s SaaS product, The Token RegRadar.
With this game-changing AI upgrade, The Token RegRadar will be a vital tool for any professional who needs to understand or analyse regulatory requirements and stay updated with regulatory changes and news within the asset tokenization and digital asset industry.
But what kind of question is the new RegGPT actually capable of answering? In this countdown series, we will show you some examples:
Can you make a list of the most important Hong Kong laws regarding virtual assets?
Certainly, here is a list of regulatory measures and frameworks in Hong Kong that pertain to virtual assets:
1. Regulatory Perimeter for Virtual Asset Funds and Asset Managers (November 2018):
Firms distributing virtual asset funds in Hong Kong and licensed asset managers with more than 10% of their assets under management in virtual assets are subject to the existing regulatory regime.
2. Licensing Regime for Centralized Virtual Asset Trading Platforms (November 2019 & January 2022):
The Securities and Futures Commission (SFC) introduced a voluntary opt-in licensing regime for centralized virtual asset trading platforms.
The regulatory requirements are comparable to those for securities market intermediaries and automated trading platforms.
Criteria for virtual assets being traded on the platform are stringent, and safe custody arrangements must be in place.
Regulated financial institutions can only partner with SFC-licensed virtual asset trading platforms to provide virtual asset dealing services to clients.
3. Restricted Access to Virtual Assets:
Virtual assets and related investment products are considered complex products and can only be sold to professional investors, with few exceptions.
The SFC is considering allowing retail investors some access to virtual assets with certain safeguards.
4. Banks’ Exposure to Virtual Assets (January 2022):
While there are no outright restrictions, banks are expected to implement appropriate risk control measures.
Banks should apply conservative loan-to-value ratios when accepting virtual assets as collateral and ensure sufficient capital for virtual asset-related exposures.
Banks intending to conduct virtual asset-related activities should consult with the Hong Kong Monetary Authority (HKMA) and obtain feedback on their risk control arrangements.
5. Mandatory Licensing Regime for Virtual Asset Service Providers (Effective June 2023):
A bespoke regulatory regime for virtual asset service providers, initially for centralized virtual asset trading platforms.
The regime aims to align AML/CFT and investor protection requirements with those applicable to traditional financial institutions.
6. Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) Regulation:
The Financial Services and the Treasury Bureau (FSTB) published a consultation paper in November 2020 on legislative proposals to enhance AML and CTF regulation through a new licensing regime for virtual asset trading platforms (VATPs).
The gazetted amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) came into effect on 1 June 2023.
7. Development of a Retail Central Bank Digital Currency (CBDC):
The Hong Kong Government, in collaboration with relevant regulators, has been exploring options to develop a retail CBDC.
8. Amendment to AML Regulation (July 2022):
A bill was introduced to amend the AML regulation, under which a definition of “virtual asset” will be introduced.
These points summarize the key regulatory measures related to virtual assets in Hong Kong.
Previously we’ve asked the AI:
“How would you evaluate the developments we have seen globally in the asset tokenization space during the second half of 2023?“
“In the second half of 2023, Hamilton Lane started tokenizing private funds on ADDX. Can you tell a bit about Hamilton Lane and explain how and why they did that? What are the main regulatory challenges of doing what Hamilton Lane is doing?”
“Can you briefly explain what the German Electronic Securities Act (Gesetz über elektronische Wertpapiere, eWpG) is all about?”
If you want to know more about a subject, you can simply ask the RegGPT follow-up questions or use The Token RegRadar’s other features like the search engine, the collection of law texts and more.
If this made you curious about how The Token RegRadar can help you in your daily work, please visit https://regradar.thetokenizer.io and sign up for your two day free trial right now.
Image by Steven Wei from Unsplash
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