Council Meetings (Oral Question): Promoting the Development of Hong Kong into an International Virtual Assets Centre (2022.11.23)

MR CHAN KIN-POR (in Cantonese): President, the recent collapse of a VA platform has revealed the incredibly lax regulatory regime at present. It can be said that there is no protection for consumers at all.

Hong Kong wants to be a pioneer, but the greatest difficulty in regulating VA lies in catching up with the knowledge and capability of the VA platform operators in terms of technological expertise. May I ask the Government what preparations it has made in this regard?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): President, Mr CHAN raised a very good point. Looking back at the evolution of VA, the origin of these kinds of assets are outside the domain of traditional finance. As they are “outside the door”, we must deal with the issue properly by figuring out how to bring them in and taking into account the potential risks during the process. Our principle is to introduce targeted regulations in response to the risks concerned so that corresponding requirements are imposed for investor protection and financial stability.

Specifically, the concern raised by Mr CHAN just now is how the authorities, as regulators or policy makers, can continuously update their knowledge to keep pace with the development of the industry and stay informed of the most recent market conditions. In this regard, we have been maintaining close communication with the industry, and “we” refers not just to us, the Financial Services and the Treasury Bureau, but also to SFC. SFC has set up a dedicated Fintech Advisory Group to communicate with the industry on a regular basis to keep abreast of the latest situation, because, in terms of the development of VA, we are not competing with anyone else, but with the future. As Mr CHAN said just now, many technological developments are constantly evolving and the scenarios or use cases available are also constantly changing, so it is all the more necessary for us to keep abreast of the times. It is precisely because of this consideration that we have this set of proposals for the regulation of VA exchanges. Thank you, President.

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