Hong Kong Stock Exchange (HKEX) released a new report that claims financial technologies – such as blockchain and cryptocurrencies – are best regulated under current financial regulations.
The document, penned by HKEX’s Chief Economist’s Office and Innovation Lab, focuses on regulating and incorporating blockchain and Artificial Intelligence applications within the financial services industry, instead of in the field of cryptocurrencies, internet finance and banking.
The report highlights the possible effects of both technologies on the securities trading and capital market, highlighting blockchain use cases in trading, clearing settlement and equity markets.
HKEX points out that the unintermediated and distributed blockchain structure is intended to improve trade transparency and cut costs.
In addition, the report shows that the use of emerging technologies could bring about or otherwise uncover new forms of financial risks. It, therefore, urges regular updates of public policies to catch up with massive disruption and hopefully avoid the advent of potential regulatory loopholes.
Regarding cryptocurrencies, HKEX observes that the different understanding of their existence has directly contributed to different regions to set up different legislative goals for regulation of the sector.
The report recommends that whether offered in a real-world or digital setting, financial-related enterprises of the same kind ought to be bound by the same law to ensure fair competition as well as deter abuse of the system.
“The public fund-raising activities of shares issuance by issuers – which do so with merely a prospectus published on the internet but without any underwriter nor compliance with the IPO registration procedures or strict disclosure requirements – must be rectified by subjecting them to the governance by the Securities Law.”
According to another report published last month, sources close to HKEX have recently claimed that the company is contemplating acquisitions in the blockchain industry as part of a change in business strategy – allegedly sparked by weakening trade ties with crypto exchanges in China in the wake of deteriorating US-China trade relations.
The report came the same day that the international watchdog for money laundering, the Finacial Action Task Force (FATF), said it would formulate laws for the regulation of digital money before June next year.