Hong Kong Security and Futures Commission official Cai Chonghui said that DeFi projects should be regulated. The official made the remarks at the ongoing web3 festival.
Hong Kong Security and Futures Commission official Cai Chonghui threw some joy into the cryptocurrency industry after stating that DeFi projects should be regulated by the body. Zhonghui made the remarks at the Web3 Festival in Hong Kong, saying that both DeFi and automated trading services will need SFC oversight.
DEXs to address licensing challenges
When it comes to specifics, Zhonghui also said that decentralized exchanges must apply for licenses. This can be problematic, because no single centralized structure manages such exchanges. Some exchanges have already started applying for a license.
Decentralized systems do not lend themselves well to such operations. Their very nature makes it difficult to comply with such orders. This also applies to punishments and punishments since there is no single person to be held accountable.
Zhonghui also said that many DeFi projects are not decentralized and that in these cases, only a small group is responsible for most of the tokens. Wu Blockchain also mentioned that Zhonggui noted that “SFC should ignore their surface data to study the objective content.”
the Web3 Festival It is currently held in Hong Kong and promotes the burgeoning Web3 industry. More than 300 speakers and 80 projects will attend the festival.
Despite the pronouncements, Hong Kong Hot on Crypto
Zhonghui’s remarks are particularly noteworthy, considering that Hong Kong has been trending towards cryptocurrency for the past six months. The region is trying to become a cryptocurrency hub and has taken many steps in this regard.
Authorities in the region have also proposed rules for platforms that engage in cryptocurrency trading. Perhaps most importantly, Chinese state-owned banks provide services to crypto companies in Hong Kong. Regarding web3, the Hong Kong CFO believes that now is the best time to invest in web3.
Will DeFi slow in Hong Kong?
Given the sharp rise in interest in the cryptocurrency industry, it is interesting to see how Zhonghui’s comments will be taken. DeFi has proven to be a pain point for regulators around the world. However, this did not stop the sector from growing.
Although it is difficult to know for sure, DeFi projects will likely continue their course until the formal law takes effect. For now, Hong Kong, as elsewhere, appears to be focused on shaping regulations, with mainland China keeping an eye on the region.
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