Crypto Currency Makes Headlines: CCTV Airs Unprecedented News Segment as HK SFC Releases Virtual Asset Licensing Framework

June 2, 2023

By Joe Pan

China state television reported on the news of a virtual asset consultation circular by the Hong Kong Securities and Futures Commission (SFC) on the same day as the much-anticipated report that set the legislative framework for virtual asset service providers.

The SFC released the “Consultation Conclusions” on May 23, 2023, outlining regulatory requirements for virtual asset trading platform operators. These guidelines, effective from June 1, will require licensed platforms to implement strict onboarding processes, enhanced disclosures, and minimum criteria to protect retail investors from market manipulation. This move not only signifies Hong Kong’s intent to become a prominent crypto hub once again but also serves as an experiment that could influence China’s stance on cryptocurrencies.

The regulatory changes in Hong Kong, coupled with the region’s strong ties to mainland China, could pave the way for wider acceptance of digital assets in the mainland. In a rare occurrence, China Central Television (CCTV), China’s largest state broadcaster, reported the news in prime time.

The segment focused on the adoption of cryptocurrencies in Hong Kong and the preparations made by regulators for virtual asset trading platforms. The official from the Securities and Futures Commission of Hong Kong highlighted the challenges in regulating virtual asset providers, including cybersecurity, client asset security, and potential conflicts of interest.

Notably, the segment did not contain any overtly negative remarks about cryptocurrencies, which contrasts with the strict restrictions imposed on cryptocurrencies in mainland China, including the ban on Bitcoin mining and cryptocurrency exchanges. However, owning cryptocurrencies is currently allowed in China.

In another rare and may be concerted or approved promotion, Douyin, the Chinese version of TikTok, briefly published cryptocurrency price quotes in its search index but later removed them, cautioning users about the lack of legal status of unofficial digital currencies.

The mention of cryptocurrencies in state media was seen as a significant development by some, with Binance CEO Changpeng Zhao (CZ) posting on Twitter noting that historically, such coverage has led to bull runs in the cryptocurrency market.

Some are not surprised by the broadcast of the CCTV segment and express optimism about China’s loosening stance on the crypto market.

Tarzan The, Senior Vice President of CLPS

“The Central Government hasn’t discouraged any opportunity and digital transformation from day one. As per their previous message, they said that ‘cryptocurrency’ encompasses several risk control areas that need sincere clarification. The big topic is how to use FinTech to improve citizens’ lives while also complying with government regulations. That’s why I am not surprised by the Central Government’s current updates,” said Tarzan The, Senior Vice President of CLPS. CLPS is a US-listed IT Management Service company with its digital currency platform in eCNY (or China RMB).

“Many crypto mining businesses have faced closure or relocation in China, but it’s important to recognize that there is still a vibrant community of NFT enthusiasts and a significant number of crypto currency holders and investors in the country,” said another Web3 operator who doesn’t want to be named. “By legitimizing the Hong Kong crypto market, it offers an opportunity for crypto investment and investors to engage in legitimate trading and transactions. Hong Kong’s regulatory framework can provide a secure and regulated environment that fosters trust and transparency. This move has the potential to attract a robust ecosystem of crypto-related businesses and investors, positioning Hong Kong as a key player in the evolving landscape of digital finance.”

Tarzan also shared his views on China’s potential to follow Hong Kong’s lead in opening the retail market for virtual asset operators, stating, “Absolutely, China will open the retail market for virtual assets in the near future, possibly within 2 to 3 years, depending on the development path of eCNY. Therefore, the Central Government may not adopt Hong Kong’s model, as the two areas still hold differing viewpoints on the position of virtual assets in the market.”

Luchia Deng, Co-founder of Ubox

Luchia Deng, Co-founder of Ubox, Founded in Hongkong, dedicated to become the largest NFT trading platform in Asia, providing richer crypto contents, superior services and enhanced liquidity.

“It’s beyond our expectations that the central government supports Hong Kong’s web3 plan despite their previous efforts to protect retail investors. Hong Kong’s web3 policy could be a pilot for the central government, similar to Shenzhen’s role in China’s reform and opening in the 1980s.,” she said. This policy could provide new opportunities for Hong Kong’s industrial development, improve tech involvement, and supplement financial reserves, she said.

“My prediction is that the central government won’t ease restrictions on mainland investors’ participation in virtual assets in the foreseeable future,” she said. The Hong Kong government’s new policy is regarded as a pilot project, and if successful, could lead to a policy change in five to ten years. However, the central government prioritizes stability over reform and development, so I don’t expect relevant policies to be implemented soon, she added.

Virtual assets will globally develop in the future, and the underlying technical infrastructure can address the problem of “trust,” essential for economic operation. Virtual assets can shift from “simple information” to “data rights,” she said. China, a significant participant in global economic collaboration, will need to embrace virtual assets when global adoption is higher. NFT, a non-standard virtual asset, has great potential for future applications. “My Ubox team is working on NFT integration with other new techs like virtual reality (Apple’s MR glasses) and AGI (GPT-4+) in the next three years,” she said.

Regarding the future of virtual assets in China, Tarzan emphasized the existing presence of NFTs and the government’s focus on improving the payment market, saying, “NFT was introduced in the Chinese market 2 to 3 years ago. The difference is that China’s NFT will be utilized in non-investment/non-tradable environments, such as NFT ticketing, NFT membership cards, NFT collection idols, and more. Cryptocurrency, such as e-CNY, will cover the entire Chinese market within 3 years. However, the Chinese government’s primary goal is to enhance convenience, stability, and safety in the payment market. Therefore, they are currently reviewing the development of cryptocurrency and monitoring market responses.”

These insights from Tarzan provide a local perspective on the potential implications of China’s evolving stance on cryptocurrencies and virtual assets. As discussions continue, the future of digital assets in China remains a topic of great interest and speculation.

As the crypto community eagerly awaits the impact of these regulatory changes, they hold the potential to restore Hong Kong’s status as a leading crypto hub while offering insights into the broader adoption of cryptocurrencies in an authoritarian regime like China.

HK SFC Regulatory Framework on Virtual Assets:

The Securities and Futures Commission (SFC) of Hong Kong has released the “Consultation Conclusions on the Proposed Regulatory Requirements for Virtual Asset Trading Platform Operators Licensed by the Securities and Futures Commission.” Here are the key findings of the consultation paper:

  1. Licence and Dual Licences Requirements: The new licensing regime under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance applies to centralized virtual asset trading platforms (VATPs) providing trading and custody services. Over-the-counter trading and brokerage activities are not covered. The SFC recommends that VATPs obtain dual licenses under both the existing Securities and Futures Ordinance regime and the AMLO VASP regime.
  2. Implementation Timeline: The revised regulatory requirements will be effective from June 1, 2023. The SFC will issue a circular providing further information on transitional arrangements and will revise the joint HKMA-SFC circular regarding intermediaries engaged in virtual asset activities.
  3. Retail Access to Licensed VATPs: Licensed VATPs can provide trading services to retail investors, subject to compliance with robust investor protection measures. These measures cover onboarding requirements, governance, disclosure obligations, and token due diligence and admission.
  4. Other Aspects of the Regulatory Requirements: The cold to hot storage ratio should not be lowered, and licensed VATPs are prohibited from providing algorithmic trading services to clients. Licensed VATPs are primarily meant to act as agents for matching orders between clients and are not allowed to conduct activities such as earning, deposit-taking, lending, and borrowing. Insurance or compensation arrangements should be in place to ensure the safe custody of client assets.
  5. AML/CFT Matters: The implementation of the Travel Rule is required, and licensed VATPs must obtain, hold, and submit required information about the originator and recipient of virtual asset transfers. Specific requirements apply when handling clients’ requests to transfer virtual assets to or from unhosted wallets. Licensed VATPs must also conduct due diligence on VA transfer counterparties and establish a business relationship with all customers, disallowing occasional transactions.

These findings provide a comprehensive framework for regulating virtual asset trading platform operators in Hong Kong, focusing on licensing, investor protection, security, and compliance with anti-money laundering and counter-terrorism financing regulations.

About the author

Joe Pan is producer and editor at

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