Hong Kong's Securities Regulator Plans Crypto Team Expansion to Support Hub Ambitions
Hong Kong's Securities and Futures Commission (SFC) is planning to significantly expand its team dedicated to cryptocurrency regulation, reflecting the region's ongoing efforts to establish itself as a major crypto hub. The proposed increase in staffing comes as part of the SFC's budget plan for the 2025-2026 financial year, highlighting a growing need for regulatory expertise in the rapidly evolving digital asset space.
Adding More Muscle: SFC Proposes New Hires for Crypto Oversight
In a budget plan presented to the Legislative Council on Monday, the SFC proposed adding 15 new positions, with eight specifically dedicated to "enhancing the staffing support for virtual asset regulatory regimes, market surveillance, and enforcement investigations." This move signals a proactive approach to regulating the burgeoning crypto industry in Hong Kong.
Budget Boost: Funding the Expansion of Crypto Regulation
The SFC estimated its recurrent expenditure for the next fiscal year, starting April 1, 2025, to be HK$2.59 billion ($332.4 million), a 7.2% increase from the previous year's forecast. A significant portion of this increase, HK$130.5 million ($16.7 million), is attributed to rising staff costs, including an average salary hike of about 2.1%. Notably, the SFC has frozen its headcount in three of the past five financial years.
Stretched Thin: The Need for More Regulatory Firepower
The regulator acknowledged that its current staffing levels have limited its ability to conduct on-site inspections of licensed corporations. In 2023, the SFC managed to inspect only around 200 licensed firms, falling short of its target of 300. The proposed staff expansion aims to address this shortfall and strengthen the SFC's oversight of the crypto sector.
Hong Kong's Crypto Welcome Mat: Licensing and Sandbox Initiatives
Hong Kong has been actively promoting itself as a crypto-friendly jurisdiction, launching a licensing regime for "virtual asset trading platforms" (VATPs) in June 2023, which allows licensed exchanges to offer retail trading services. The government is also making progress on a proposed stablecoin bill, further solidifying its commitment to fostering a regulated crypto environment.
Streamlining the Process: Engaging with the Industry
In December, the SFC emphasized its efforts to streamline the VATP licensing process. "We have been proactively engaging with VATPs' senior management and ultimate controllers, which helps drive home our expected regulatory standards and expedite our licensing process for VATPs," said Eric Yip, the SFC's Executive Director of Intermediaries.