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Edited by Jiten171 at 27-12-2023 07:14 AM
The Hong Kong Securities and Futures Commission released two guidelines related to "Tokenized Securities" today. These guidelines provide specific regulations for product providers and intermediaries, as well as investor protection requirements for publicly selling tokenized securities. The guidelines update the regulations released in 2019 regarding Security Token Offerings (STOs) and conditionally open them to retail participation.
The Securities and Futures Commission of Hong Kong mentioned that since the nature of "Tokenized Securities" is essentially traditional securities packaged as tokens, they will continue to apply the laws and regulatory provisions that govern traditional securities markets. There is no requirement to impose a mandatory "professional investors only" rule. This means that the restrictions the Commission placed on Security Token Offerings (STOs) in 2019 limiting them to professional investors no longer apply.
However, if the sale of tokenized securities does not receive approval under the "Securities and Futures Ordinance" or does not comply with the prospectus regime, the Commission specifies that such products can only be sold to professional investors or under applicable exemptions.
The Commission's guidelines highlight that intermediaries engaged in the distribution of tokenized securities, providing advice on them, or conducting secondary market trading on virtual asset trading platforms are subject to current conduct regulations for securities-related activities. Additionally, intermediaries should manage new risks unrelated to traditional securities, including blockchain network interruptions and cybersecurity risks.
When assessing applications, the Commission will consider whether the insurance or compensation arrangements on virtual asset trading platforms are satisfactory. For example, platforms must demonstrate that issuers have implemented monitoring measures to prevent theft and hacking risks to protect tokenized securities holders using public non-permissioned networks. |
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Post time 7-11-2023 20:39:05