Key Takeaways:
Securities and Futures Fee (SFC) considers tokenized securities as conventional monetary merchandise which have solely a digital type. The brand new framework removes the professional-investors-only limitation, enabling the retail to take part in eligible tokenized belongings. The licensing intermediaries are answerable for performing technical due diligence and authoritatively recording possession on-chain.
The Hong Kong Securities and Futures Fee (SFC) has revised its regulatory framework to incorporate all of the tokenized securities formally in the principle monetary markets. These instruments will likely be dealt with identical to unusual securities, so long as they adjust to the present security and compliance requirements.
Conformity to Conventional Frameworks
The regulator claimed that tokenized securities will likely be on equal footing with frequent securities like bonds or funds which might be issued by means of distributed ledger expertise (DLT). Within the SFC see by means of method, the pre existent safety of the buyers underneath the present see by means of method usually are not missed, and issuers are allowed to tokenize legacy securities with out essentially declaring them advanced merchandise solely accessible to skilled buyers.
This can be a main change to the earlier regime of 2019 the place solely skilled buyers had been allowed to purchase safety tokens. Plain-vanilla tokenized bonds or funds might be supplied to the retail buyers underneath the brand new rules. The SFC nonetheless wants intermediaries to judge the technological dangers and assure that the rights of buyers in authorized phrases are correctly represented and maintained in digital format.
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Duty and Threat Administration
The SFC leaves the system safety and strong conserving operations within the fingers of the issuers of the merchandise primarily. The corporations want to pick people who’re educated on tokenization expertise. The possession data ought to all the time stay so as and match inside all of the service suppliers of the ecosystem.
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Important Due Diligence Companies
The middlemen should go all the way down to the nitty-gritty of technical due diligence, in investigating cybersecurity threats and the anticipated enterprise continuity. Within the case of public, permissionless blockchains, then extra safety is required to forestall theft or hacking.
The regulator additionally refers to having utmost readability on when a settlement is open-ended. Disclosure paperwork ought to explicitly point out on-ledger strikes, the final phrase or not, on that the off-chain data are nonetheless sovereign. That’s not to lose the possession tussle in case the community crashed or one thing else grew to become rogue.
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