Asia-Pacific regulators aim to maximize digital assets’ innovation potential

By OSL CEO Wayne Trench

Recent regulatory moves in Hong Kong and Singapore are helping cement Asia-Pacific’s position as the global leader in digital asset trading. 

Through forward thinking actions, such as creating thorough and robust regulatory frameworks for digital assets (and issuing approval in principle to OSL, for example), governments in these markets are ensuring that the sector is positioned to develop at the highest level possible.

Up till now, efforts to regulate the space have been mixed, with Japan seen to be at the more liberal end of the spectrum with markets such as mainland China at the other. That said, mainstream investor interest today is such that national authorities are reappraising their approach and moving closer together.

While a pan-regional standard is not yet at hand, the majority agree that integrating digital assets into the financial services industry will be a positive development. They understand that to do that, rigorous regulation is essential and must both mitigate risk whilst creating a fertile environment in which digital assets can flourish to their full potential.

Investor concerns around security, market manipulation and transparency are valid and must be addressed swiftly if more are to enter the market. Hong Kong’s Securities and Futures Commission (SFC) and the Monetary Authority of Singapore (MAS) are doing just that.

Unveiled last November, the SFC’s framework is groundbreaking in that it treats digital assets with a level of oversight akin to any other security assets within its regulatory jurisdiction. In fact, in order to gain regulatory approval, all service providers must not only meet stringent standards similar to those required of traditional finance firms but must also comply with Virtual Asset specific controls in terms of wallet management, insurance coverage, segregated banking facilities along with a host of other controls. The bar in Singapore is still evolving, but expected to be similarly high, albeit with specific tiers of regulations for the different types of digital assets, and is implemented with the goal of supporting, rather than restricting, innovation.

Other regulators around the region are moving in a similar direction with a view to increasing participation by raising trust. Australian authorities keep a close eye on the market and do not hesitate to suspend businesses that fail to operate above board. Japan is shifting from a self-regulatory model to a standard that sees licenses revoked if an operator is found to be non-compliant. And as it launches its own digital RMB, China’s firm grip on digital assets and sense of regulatory clarity give it the ability to shape the sector as a whole.  

Regulation is developing fast, and license approvals such as the SFC’s approval in principle of OSL are part of an optimistic new chapter for digital assets. As this unfolds, we can expect Asia-Pacific to continue to set an example for the rest of the world to follow.

OSL is Asia’s most comprehensive digital asset platform providing brokerage, exchange, software-as-a-service and insured custody solutions to professional investors.

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