{"id":354792,"date":"2018-10-23T07:30:26","date_gmt":"2018-10-23T07:30:26","guid":{"rendered":"https:\/\/wncen.com\/?p=354792"},"modified":"2018-10-23T05:29:13","modified_gmt":"2018-10-23T05:29:13","slug":"hong-kong-stock-exchange-crypto-should-be-subject-to-existing-securities-regulation","status":"publish","type":"post","link":"https:\/\/wncen.com\/news\/ai-and-tech\/hong-kong-stock-exchange-crypto-should-be-subject-to-existing-securities-regulation\/","title":{"rendered":"Hong Kong Stock Exchange: Crypto Should be Subject to Existing Securities Regulation"},"content":{"rendered":"
A research report by the Hong Kong Exchange (HKEX) argued that fintech firms using cryptocurrency should be subjected “to the governance by the Securities Law”.<\/p>\n
The stock exchange of Hong Kong, Asia’s third-largest operator by market cap, published a report<\/a> on fintech applications and related regulatory framework. Focusing on blockchain and AI applications in the securities industry, the paper explored how they could be integrated into trading, clearing, settlement, and regulation, in a feasible way.<\/p>\n The exchange’s Chief China Economist’s Office and Innovation Lab discussed how blockchain is regulated differently in different jurisdictions and found that the “principle of\u00a0consistency requires that […] the issuance of digital currencies and digital\u00a0funds must be governed under the existing securities regulatory framework”.<\/p>\n “The public fund-raising activities of\u00a0shares issuance by issuers \u2014 which do so with merely a prospectus published on the\u00a0Internet but without any underwriter nor compliance with the IPO registration procedures or\u00a0strict disclosure requirements \u2014 must be rectified by subjecting them to the governance by\u00a0the Securities Law.”<\/p><\/blockquote>\n The report also found challenges for blockchain in private equity markets from a legal compliance perspective as e-certificates of ownership need to be approved by regulators<\/a> as\u00a0well as legal departments.<\/p>\n “To recognize equity rights and other corporate operations,\u00a0regulators may need the help of multiple centers to enable related authoritative entities\u00a0to participate in the blockchain for exercising their respective responsibilities and at the\u00a0same time to enable information transparency and timely sharing.”<\/p><\/blockquote>\n The authors also show concern about the risks of a large scale deployment of blockchain in the securities industry<\/a>.<\/p>\n “As each node has a ledger of the whole chain,\u00a0any successful hacking will not only expose data of the hacked node to theft but also\u00a0expose all data in the full ledger to potential replication.”<\/p><\/blockquote>\n As to the applications of blockchain in the securities industry, the document explained that its distributed, decentralized, encrypted, extensible, and programmable nature, have the potential of being used in post-trade clearing and settlement, as well as\u00a0asset rehypothecation and\u00a0in the private equity market.<\/p>\n