Conventus Law

Conventus Law

by

In the wake of the recent JPEX scandal (read our previous article here), the Securities and Futures Commission (“SFC”) has taken several steps to enhance investor protection and awareness of VATPs.

VATP Lists

The SFC announced on 29 September 2023 that it had published several lists concerning virtual asset trading platforms (“VATPs”) as part of its efforts to disseminate information on VATPs in a clear, transparent and timely manner:

  1. List of VATPs formally licensed by the SFC;
  2. List of VATP applicants, which have yet to be approved by the SFC;
  3. List of VATP applicants whose applications have been returned, refused or withdrawn;
  4. List of VATPs required to be closed down within a specified period; and
  5. List of VATPs deemed to be licensed as of 1 June 2024.

The SFC has also issued a list of suspicious VATPs to help investors identify known suspicious VATPs operating in Hong Kong.

Working Group on VATPs

On 4 October 2023, the SFC and Hong Kong Police Force (“HKPF”) formed a dedicated working group to enhance collaboration in monitoring and investigating illegal activities related to VATPs (“Joint Working Group”).

The Joint Working Group comprises representatives from the HKPF’s Commercial Crime Bureau, Cyber Security and Technology Crime Bureau and Financial Intelligence and Investigations Bureau and the SFC’s Enforcement Division and Intermediaries Division. The Joint Working Group was set up to:-

  1. Facilitate the sharing of information on suspicious activities and breaches of VATPs;
  2. Implement a mechanism to assess the risks of suspicious VATPs; and
  3. Enhance coordination and collaboration in related investigations.

Hauzen LLP’s Thoughts

The publication of the lists of VATPs and establishment of the Joint Working Group are much welcome, and much needed.

By providing a comprehensive and up-to-date record of licensed VATPs, the SFC enables investors to make informed decisions when engaging in digital asset transactions. This collaboration between law enforcement and regulatory authorities is also vital in maintaining the integrity of Hong Kong’s financial ecosystem. It is hoped that the Joint Working Group will facilitate the sharing of intelligence and expertise, allowing for a more comprehensive understanding of emerging trends and potential threats in the VATP space.

The above measures are also important to alleviating investor concerns in the fallout of the JPEX incident, particularly in light of the Hong Kong government’s recent efforts in positioning the city as one of the world’s leading digital asset hubs, coupled with criticism in some quarters of the SFC’s perceived lack of early and decisive action against JPEX.

Having said the above, it is hoped that regulatory authorities can mitigate obvious risks without investors having to first suffer substantial losses. Proactive measures, such as the publication of lists of VATPs, are pre-emptive measures that could have been easily taken before the JPEX incident.

To find out more, contact us today for a discussion.

WRITTEN BY

For further information, please contact:

Greg Heaton – Partner,
gregheaton@hauzen.hk

Greg Heaton is a partner of Hauzen LLP. He is a legal and financial services professional with over 20 years of experience in advisory and regulatory roles.

Admitted as a solicitor of the High Court of Hong Kong and a legal practitioner of the Supreme Court of New South Wales, he was formerly a partner of another Hong Kong law firm, advising on asset management, securities regulation, and contentious regulatory matters, and director of an international consultancy firm, providing regulatory advice and project-based consultancy services to Hong Kong and global financial services firms.

In addition, he was formerly a senior director of the Securities and Futures Commission (SFC), where he played a key role in the oversight of SFC-licensed intermediaries and the development of regulatory policy. He was head of the Licensing Department at the SFC and a member of the Board of the Financial Dispute Resolution Centre, the body responsible for the arbitration and mediation of disputes between financial institutions and their clients.

Education

  • University of New South Wales, Master of Law and Management (2005)
  • Australian Graduate School of Management, Graduate Diploma in Management (2003)
  • University of Canterbury, LL.M. Honours (First Class) (2000)
  • University of New South Wales, LL.B. (1999)
  • University of Canterbury, B.A. (1995)
  • Osaka University of Foreign Studies, Diploma of Japanese Language and Culture (1994)

Experience

  • Advising on securities regulation, listing rules and corporate governance.
  • Fund formation and restructuring.
  • Acquisition and sale of SFC licensed corporations.
  • Drafting business plans, compliance manuals, operations manuals and services agreements.
  • Contentious regulatory matters including SFC investigations and disciplinary actions.
  • Assisting licensed corporations with preparation for and handling of regulatory inspections.
  • Conducting audits of licensed corporations’ operations and internal control frameworks.
  • Advising on APAC licensing requirements, product disclosure rules and marketing restrictions.
  • Providing training on regulatory requirements and industry developments.

Register for your monthly Asia legal updates from Conventus Law

Error: Contact form not found.

RELATED ARTICLES