Julia Leung, executive director of Hong Kong's Securities and Futures Commission (FSC), said tokenization is a positive disruptive innovation for markets.
Speaking at the annual DC Fintech Week conference, Hong Kong FSC Chief Executive Julia Leung stressed that the securities regulator is open to innovation offered by emerging technologies such as blockchain, which can encourage the evolution of financial markets to better adapt to future needs.
Leung stressed that the regulator maintains a realistic and favourable approach towards new technologies and is therefore encouraging innovation in a responsible manner.
Regarding the tokenization of assets, a topic that has gained great relevance among institutions in recent months, Leung said that the FSC has its sights set on this disruption, which he has called “positive” for the evolution of financial markets.
The official highlighted that many traditional financial institutions are currently experimenting with tokenization on the blockchain and that the securities regulator is prioritizing the regulation of this innovation, in order to mitigate existing risks and encourage greater institutional entry into the blockchain world.
“Without guidance, traditional finance will be hesitant to enter the space”, Leung said, reporting that the FSC is initiating discussions with market players and participants as tokenization becomes a focus.
Last week, the Hong Kong FSC published a set of requirements on the tokenization of investment products.
At circular issued, the securities regulator stressed that traditional financial institutions are already experimenting with digitizing assets on the blockchain to “increase product efficiency, reduce operating costs by decreasing dependence on intermediaries and reach end investors through new channels”.
In light of this growing demand, the SFC is establishing licensing requirements that allow institutions interested in tokenization to trade licensed assets or trade tokenized assets on regulated platforms, thereby facilitating the development of this market.
Finally, in addition to tokenization, Hong Kong is also considering allowing the listing of a Bitcoin spot ETF, to facilitate direct entry for retail and institutional investors into the market-leading cryptocurrency, while encouraging innovation and ensuring regulation of this new asset class.
Continue reading: Tokenization as a catalyst for financial innovation
