According to a new report, the Hong Kong Stock Exchange (HKEX) has recommended regulation of the fintech companies, as well as businesses focusing on cryptocurrency and blockchain, are best suited under the existing laws.
HKEX’s Chief China Economist’s Office and Innovation Lab in a research report analyzed blockchain and artificial intelligence for their potential in the tradition, equities and settlement markets. The report that was published on 18th October 2018 states that emerging technologies could be integrated into various spaces such as settlement, clearing, investment, and trade. The integration, however, would be quite common to financial institutions.
The HKEX in its report has emphasized implying regulations for businesses that are same in nature. It insists that financial businesses of similar working should be put under similar regulation. The authors of the report have termed the application of the same regulation as a consistent principle in the report.
By consistent principle, the authors imply that the digital currencies and funds should be issued under the regulation of the existing security framework. The authors further elaborated saying the public fundraising projects like IPO in which shares are issued for the public through the internet without seeking any approval from the concerned parties while ditching the IPO registration official procured should actually be subjected to the Security Law regulations.
Moreover, the introduction of similar regulations to financial services would encourage fair competition, effective regulation as well as the prevention of any regulatory arbitrage, according to the report. The report also acknowledged the possibility of any loopholes in the regulatory bodies due to the ever-changing nature of fintech companies. Therefore, it is necessary to update the regulations regularly to maintain pace with the changes in the technology sphere.
The reports were launched on the same day when “Financial Action Task Force” – the international money-laundering watchdog announced its plans of introducing regulations for cryptocurrency across the globe by June 2019. The introduction of the regulations would mean that any country willing to provide international financial system would be required to avail certain license and regulate coin offering, exchanges and more.
HKEX has been closely monitoring the adoption of blockchain and cryptocurrency by different countries. In March 2018, the author was said to be in talks with the Australian Securities Exchange (ASX) for its blockchain settlement system, as reported by CoinDesk. According to March reports, HKEX and ASX have collaborated on the blockchain under which the two will exchange their learning on blockchain adoption in order to compete and cut costs.
Charles Li, chief executive of Hong Kong Exchanges and Clearing, in an interview said that exchanging is considered as adopting blockchain in various areas such as lending and stock borrowing as well as for other traders that are carried over-the-counter. He explained the plans saying that the authority intends to deploy blockchain in the areas where no one wants to spend money. In short, for the authority, the blockchain is the cost-effective way to complete certain transaction that otherwise could be expensive.