The Supervision of Virtual Assets by the Hong Kong Securities and Futures Commission and its Implications

Due to its ability to undertake some monetary functions, in recent years, the types and scale of virtual assets represented by virtual currencies have rapidly expanded, and virtual assets have become one of the important financial assets due to their financial attributes. Due to its certain security risks, however, regulatory authorities in mainland China completely prohibited virtual asset transactions, including virtual currencies since 2017. Unlike the regulatory attitude in mainland China, Hong Kong SAR has shown a proactive embrace towards virtual assets. This article first analyzes the considerations of the Hong Kong Securities and Futures Commission regarding the inclusion of virtual assets such as virtual currencies in the regulatory framework, as well as the objects and requirements for inclusion in regulation. At the same time, it also points out the problems faced by the Hong Kong Securities and Futures Commission in regulating virtual currencies, providing reference for the regulatory behavior of other financial regulatory institutions, including mainland China, and proposing suggestions for understanding the value of virtual assets and regulating virtual asset services through legislation.