Hong Kong SFC eases requirements as exchanges face crypto talent crunch

Hong Kong is preparing to introduce a new regime of virtual asset regulation. Securities and Futures Commission (SFC) published Conclusion of weeks of consultations on regulatory guidelines for cryptocurrency platforms on May 23rd.

Hong Kong cryptocurrency exchanges must be licensed under the Securities and Futures Ordinance (SFO) and the Anti-Money Laundering and Countering the Financing of Terrorism Ordinance (AMLO). The SFC will publish his application in the Gazette on May 25. start Applications will be accepted from June 1, when the guidelines come into effect. At this time, Hong Kong does not have a licensed cryptocurrency platform for retail investors.

This regulation imposes different requirements on crypto platforms. The guidelines require cryptocurrency platforms to employ at least two “Responsible Officers” (ROs) for each type of license they hold. Therefore, a crypto platform licensed under SFO and AMLO will be required to employ her four her ROs.

The responsible officer is part of the top management and must be licensed by the SFC and approved as an RO of the exchange. A lot of experience is also required for an RO to be licensed.

Since cryptocurrency is a relatively new field, not many executives have cryptocurrency and blockchain expertise. Hong Kong has around 18,000 licensed ROs, but only 95 hold Type 7 licenses to provide automated trading services sought after by cryptocurrency exchanges.

There is a clear shortage of ROs, which is a concern for cryptocurrency exchanges vying for new licenses. In fact, Lily King, chief operating officer of his Cobo, a digital asset management firm that is applying for a Hong Kong license, said: Said Bloomberg reported that RO has become “the most difficult position to fill in Hong Kong”. The report notes that it could take up to five months to fill RO positions.

Given the manpower shortage, the SFC has revised its requirements so that dual-licensed cryptocurrency exchanges are only required to employ two ROs instead of the previously stipulated four. became. The SFC pointed out that:

“There may be a shortage of people with experience in both crypto assets and traditional securities, so we are ready to adopt a pragmatic approach…”

Advantageous position in Hong Kong

To become an RO, an individual must have relevant experience in the field or product for which they wish to be licensed, as well as many years of management experience. The Responsible Officer, as the name of the title suggests, is responsible for ensuring that the company remains compliant. Meets all rules and regulatory requirements. And if the company fails to comply, the RO may be subject to civil and criminal penalties.

Due to the shortage of ROs, cryptocurrency exchanges are looking to cooperate with ROs in traditional finance. However, such individuals are generally reluctant to change career tracks to cryptocurrencies, which are seen as more risky. Therefore, there needs to be more incentives to change positions, King told Bloomberg.

RO is well-positioned in Hong Kong as labor shortages continue.A limited number of his ROs with blockchain and cryptocurrency experience will be paid up to 20% more than his ROs in traditional finance, according to Bloomberg. report. In fact, according to reports, the highest salary for an RO in Hong Kong is over $19,000 per month.