Hong Kong issues rules for asset tokenization as interest mounts

The Securities and Futures Commission (SFC) of Hong Kong has actually released 2 circulars to control digital asset tokenization.The circulars use directions to intermediaries taking part in tokenized securities activities and outline the criteria for tokenizing financial investment products licensed by the SFC.The SFC thinks about tokenized securities as traditional securities with a tokenization layer. As a result, the specific legal and regulative requirements that use to conventional securities markets likewise use to tokenized securities.The regulator specified that tokenized securities offerings should stick to the Companies Ordinances Prospectus Regime and the Securities and Futures Ordinance on deals of investment. Furthermore, intermediaries providing guidance on tokenized securities, handling tokenized funds, and assisting in secondary market trading on virtual property trading platforms need to abide by the existing conduct requirements for securities-related activities.Screenshot of the tokenized security circular. Source: SFCThe recent guidance from the regulator accompanies Hong Kongs expedition of tokenization. In February, the Hong Kong Monetary Authority issued the worlds inaugural tokenized green bond, raising approximately $100 million.The circular likewise states that trading platforms with licenses need to establish SFC-approved compensation plans to safeguard against possible security token losses. To show, operators of cryptocurrency trading platforms can reveal their adoption of protective procedures like transfer constraints or whitelisting to make sure the security of tokenized securities.Related: JPEX scandal will not harm Hong Kong crypto vision: Financial SecretaryConversations about tokenization have actually just recently risen, and the SFC noted an increased interest from monetary institutions in tokenizing standard monetary instruments within global financial markets. The regulative body clarified that it has been evaluating various recommendations concerning tokenizing investment products, consisting of those related to the main offering and secondary trading of tokenized products on SFC-licensed virtual property trading platforms. It included:” The SFC sees the potential benefits of tokenization to the financial markets, especially in increasing efficiency, enhancing openness, lowering settlement time and reducing costs for standard financing, but it is also aware of the brand-new dangers arising from utilizing this innovation.” Magazine: Crypto City: Guide to Osaka, Japans second-biggest city

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