Publication
Hong Kong's Stablecoins Bill: Regulatory Regime for Issuance and Offers of Stablecoins
On 6 December 2024, the Hong Kong* Government published the highly anticipated Stablecoins Bill (Stablecoins Bill). On 18 December 2024, it was introduced into the Legislative Council of Hong Kong for First Reading.
23 December 2024
Insight
From Paper to Digital: The Importance of enhancing electronic transactions law to enable Distributed Ledger Technology (DLT)
As the global financial landscape continues to evolve at a rapid pace, the significance of electronic transactions is becoming increasingly prominent. Businesses and consumers are progressively embracing digital solutions for their financial transactions, highlighting the crucial need for the law to enable such activities. In Hong Kong, the Electronic Transactions Ordinance (Cap. 553) (“ETO”) is fundamental to facilitating electronic transactions, ensuring the legal recognition of electronic signatures and contract creation.
10 December 2024
Insight
Hong Kong Launches Digital Bond Grant Scheme
In a significant move to foster the digital securities market and encourage the adoption of tokenisation technology in capital market transactions, the Hong Kong* Monetary Authority (“HKMA”) published details of the Digital Bond Grant Scheme (the “DBGS”) on 28 November 2024.
03 December 2024
Featured Insight
Hong Kong’s Proposed Stablecoin Regulatory Regime: key takeaways from consultation conclusions
19 July 2024
Insight
Tokenised products: HKMA issues guidance to authorized institutions
Recently, the Hong Kong* Monetary Authority (HKMA) issued an important circular setting out the supervisory standards expected of authorized institutions (AIs) in relation to their tokenised product-related activities. The HKMA circular applies to tokenised products that are not regulated under the Securities and Futures Ordinance (Cap. 571) (SFO). Examples of non-SFO-regulated tokenised products include currency-linked and/or interest rate-linked tokenised structured deposits/investment products issued by AIs. According to the HKMA, AIs should also comply with the standards set out in the HKMA circular in respect of their tokenised deposits.
06 March 2024
Insight
HKMA issues digital asset custody rules for banks
This alert provides a summary of the Circular. Please also refer to the regulatory chart in our 16 February 2024 alert that shows where this fits into Hong Kong’s overall framework for digital assets. The Circular is also issued against the backdrop of international efforts in this area, including, the International Organisation of Securities Commissions’ (IOSCO) Policy Recommendations for Crypto and Digital Asset Markets (November 2023) and the emergence of digital asset and blockchain-specific technical standards from the likes of the International Standards Organization (ISO).
22 February 2024
Insight
Hong Kong proposes to regulate OTC virtual asset brokerage services: 10 key things you should know
Hong Kong has one of the most comprehensive regimes for virtual asset (VA) exchanges (VATPs) in the world, regulated by one of the most rigorous authorities in Hong Kong, the Securities and Futures Commission (SFC). Entities already regulated by the SFC or Hong Kong Monetary Authority (HKMA) are also subject to rigorous standards. Hong Kong is now proposing to plug a gap for over-the-counter (OTC) spot brokerage of certain unregulated VAs, this time via the Customs & Excise Department (Customs & Excise), to help address an unfortunate raft of scams and ensure a robust overall framework. Specifically, the Financial Services and the Treasury Bureau (FSTB) has issued a consultation paper on a legislative proposal to regulate OTC spot trading of certain VAs (VA OTC services) under the existing Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) (Consultation Paper). This article provides a primer on the proposals and where the Consultation Paper fits into the overall VA framework in Hong Kong, plus some key takeaways.
16 February 2024
Insight
Basel cryptoasset capital standards: HKMA consults on Hong Kong implementation
A few days ago, the Hong Kong Monetary Authority (“HKMA”) published a much-anticipated consultation paper on implementing the Basel Committee’s standards for the regulatory capital and prudential treatment of banks’ cryptoasset exposures (“Basel Cryptoasset Standards”) in Hong Kong.* This article (which includes a flowchart) provides a detailed overview of the HKMA consultation paper and the Basel Cryptoasset Standards that the consultation paper seeks to implement.
15 February 2024
Insight
Stablecoins: Hong Kong proposes regulatory regime for issuance and offers
This article provides a high-level overview of Hong Kong’s stablecoin proposal, with our preliminary observations based on our work with stablecoin issuers, virtual asset platforms and industry groups over many years. We would be delighted to discuss these further with you.
05 January 2024
Insight
Tokenised securities: Hong Kong SFC issues important guidance for intermediaries
During Fintech Week, the Hong Kong Securities and Futures Commission (“SFC”) issued two highly anticipated circulars to its regulated intermediaries on the tokenisation of securities and other investment products. This article, which includes a two-minute quick read section and diagrams, takes a deep dive into the first SFC circular, which provides important regulatory guidance to intermediaries that engage in activities relating to tokenised securities (“Intermediaries Circular”). This article is the second in a new KWM series on tokenisation across Asia.
13 November 2023
Insight
Tokenisation of securities and other investment products – what, why and key considerations in Hong Kong and China Mainland
Tokenisation is one of the hottest topics in finance circles these days. This article introduces you to what tokenisation is, why it is important and explores some key legal and regulatory considerations, with a focus on Hong Kong and China Mainland. Last week, the Securities and Futures Commission of Hong Kong (“SFC”) published two highly anticipated circulars on tokenisation of SFC-authorised investment products and intermediaries engaging in tokenised securities-related activities. We will analyse these SFC circulars in future articles.
06 November 2023
Insight
Hong Kong SFC issues final rules for virtual asset exchanges
The Hong Kong Securities and Futures Commission (SFC) has released its eagerly awaited conclusions (Consultation Conclusions) to its consultation on its proposed rules to be implemented under Hong Kong’s new virtual asset exchange licensing regime (VA Licensing Regime). The Consultation Conclusions set out regulatory requirements applicable to the VA Licensing Regime in the form of various draft guidelines (Regulatory Requirements). Over 150 industry participants, including King & Wood Mallesons, provided written submissions, indicating the importance of the new regime and ensuring appropriate balance in the rules regulating the industry are applied. This alert gives you a snapshot of the key things you need to know about the Consultation Conclusions and Regulatory Requirements and the key next steps for exchanges.
01 June 2023
Insight
Expanding Mainland China NFT platforms into Hong Kong – What do you need to know?
This article discusses: (a) an overview of the recent NFT landscape in Mainland China; and (b) the key issues to consider when issuing NFTs, launching an NFT platform, or providing NFT-related services in Hong Kong.
23 May 2023
Insight
Cryptocurrency is “property” under Hong Kong law: Part 1 – what are the key implications and what is the judicial position in Mainland China?
On 31 March 2023, in the landmark decision of Re Gatecoin Limited (In Liquidation) [2023] HKCFI 914 (“Gatecoin Case”), the Court of First Instance of Hong Kong has, for the first time, ruled that cryptocurrency is “property” under Hong Kong law. The Gatecoin Case is one step ahead of the Hong Kong Government’s policy statement that, in order to enhance investor protection, there is a possibility of introducing a statutory definition of cryptocurrency as property, while recognising that the unique characteristics of cryptocurrency may differ from traditional assets. In ruling that cryptocurrency is “property”, the Gatecoin Case brings Hong Kong’s jurisprudence in line with other major common law jurisdictions. Interestingly, despite Mainland Chinese regulators’ imposition of a general ban on cryptocurrency trading, the judicial position in Mainland China on the legal status of Bitcoin also broadly aligns with that in major common law jurisdictions.
08 May 2023
