Hong Kong is taking steps to shore up the risks associated with its fast-growing decentralized finance (DeFi) industry. Hong Kong Securities and Futures Commission (SFC) has announced that all DeFi platforms will require licenses from the regulator in order to operate legally in the territory.
The move comes amid reports from the US pertaining to several instances of major hacks and incidents in the DeFi space. It is well-known that the North Korea used DeFi for money laundering activities. This necessitates the need for better customer protection and fulfilment of KYC/AML compliances.
Additionally, there are still concerns that DeFi projects might not measure up to certain rigid protocols and standards. It is worth noting that DeFi source code is open source, this could expose vulnerabilities and increase the risk of financial losses in the absence of proper legislation and regulations.
In order to ensure the best possible protection and guard against any malicious activities, the SFC laid out various provisions. The vision is to advance the DeFi industry in Hong Kong while deterring any risks linked to money laundering and financial piracy. The SFC will be introducing new monitoring mechanisms and enforcement actions that will be enforced annually, or sooner depending on the scope of changes.
Apart from this, it is also stated that the regulators deem DeFi to be an extremely essential element in the crypto-verse. Thus, the mission is to promote collaboration between the private and public exchanges between DeFi projects to ensure the best possible result from participating in the industry.
In short, Hong Kong has announced that all DeFi platforms must obtain a license from SFC to keep them from potential threats and malicious activities. On top of this, new monitoring and enforcement measures will be put in place to protect the investments and for ensuring legal compliance. The regulators also encourages participating between in private as well as public DeFi industry to fuel its growth and promote efficiency.
Anthony Brooks
- 2023-04-12
Hong Kong Introduces Licensing For All DeFi Platforms
Hong Kong Securities and Futures Commission (SFC) has announced that all decentralized finance (DeFi) platforms will require licenses from the regulator in order to operate legally in the territory. This move comes after reports of major hacks and money laundering activities linked to DeFi.
