Financial regulators in Hong Kong set requirements for over-the-counter crypto derivatives in line with European Securities and Markets Authority standards, including the use of digital token identifiers.
On September 26, the Hong Kong Monetary Authority and the Securities and Futures Commission published a plan that would align their OTC reporting requirements with those of ESMA after studying responses to a March 2024 consultation paper.
The HKMA and SFC propose that the mandatory use of digital token identifiers for reporting CTO derivatives will begin to take effect on September 29, 2025.
The decision was made after regulators received feedback on the proposal from some Hong Kong stakeholders who recommended using DTIs “to unambiguously identify the underlying assets of crypto assets for over-the-counter derivatives “.
Hong Kong stakeholders and investors have noted that they are finding it difficult to place OTC derivatives in any of the five traditional asset classes, namely interest rate, foreign exchange, credit, commodities and stocks.
Therefore, Hong Kong regulators decided to impose reporting requirements to enable the use of DTI.
In the statement, the HKMA and SFC noted that ESMA has proposed and started implementing the DTI in its reports as early as October 2023. Additionally, the DTI currently serves as the main reference point for DTI service providers. crypto assets across Europe.
“To assist reporting entities in the transition to UTI, they may continue to report existing Unique Exchange Identifier (USI) and Unique Trade Identifier (TID) business identifiers in accordance with current reporting requirements , or declare the UTI voluntarily, until the implementation date. .”
The statement also hinted at cross-border collaboration with financial regulators in countries including Singapore, Australia and Japan “on a coordinated implementation plan for UTI in the Asia-Pacific region.”
(APAC) to ensure smooth adoption of UTIs in Hong Kong,”
On September 12, the South China Morning Post reported that Hong Kong’s Customs and Excise Department plans to partner with the local Securities and Futures Commission to explore new licensing regulations for OTC crypto services.
Prior to the joint efforts, C&EDs were the sole regulators of OTC services. Meanwhile, the SFC has consulted industry players on the potential new regime and assessed the regulations relating to cryptocurrency custodian services.
