Regulator sets out its expectations for banks looking to provide digital asset custody services, and sell and distribute tokenised products.
By Simon Hawkins and Adrian Fong
On 20 February 2024, the Hong Kong Monetary Authority (HKMA) published two circulars prescribing additional guidance to banks interested in carrying on certain digital asset services:
A new guidance creates a regulatory framework for tokenisation of retail investment products and provision of services for tokenised financial instruments.
By Simon Hawkins and Adrian Fong
On 2 November 2023, the Securities and Futures Commission (SFC) issued two widely anticipated circulars on tokenisation during the 2023 Hong Kong FinTech Week.
One circular provides conduct-related guidance to intermediaries engaging in tokenised securities-related activities (Activities Circular). The other circular addresses the tokenisation of SFC-authorised investment products (Products Circular), such as retail investment funds.
Before the circulars were released, the SFC’s chief executive spoke of the regulator’s evolutionary rather than revolutionary approach to addressing digital asset-related activities. The circulars indeed reflect this gradual, incremental approach rather than a big-bang moment of regulatory change, and we expect market participants to welcome the SFC’s new guidance as some of them consider exploring tokenised products and services.