Hong Kong HSFA, CARF links call for easing of encryption reporting standards

On January 19th, the Hong Kong Securities and Futures Professionals Association(HSFA) submitted a position paper to the government, requesting practical adjustments in the process of implementing the international crypto asset reporting framework. This move comes as the scope of the OECD Cryptocurrency Asset Reporting Framework(CARF) expands, and it represents an important step in officially communicating industry concerns to the government.

Regulation Improvement Requests Initiated by Submission of Government Opinion

The association expressed its principled support for amending the common reporting standards, including the adoption of CARF, mandatory registration of crypto service providers, and expanded scope of transaction reporting. While agreeing with the goal of enhancing international transparency, they emphasized that specific implementation methods require joint consideration by industry and government. Above all, the core issue is how realistic the link encryption standards of CARF are in actual operational environments.

Four Key Relaxation Measures Proposed by the Association

HSFA proposed four specific improvements to the government. First, they argued for a reasonable adjustment of requirements for institutions that do not report activities, and called for strengthening personal data protection standards. They also suggested allowing companies to transfer record-keeping responsibilities to regulated third parties when ceasing operations. These proposals aim for a balanced approach that reduces industry practical burdens while achieving transparency goals through link encryption.

Balancing Personal Data Protection, Penalty Caps, and Industry Safeguards

The association warned that the current unlimited account-based fines and personal liability regulations for directors could excessively increase compliance risks. They expressed concern that even well-intentioned companies might face undue regulatory burdens and urged the introduction of clear penalty caps. This is interpreted as a request to find a realistic compromise between strict monitoring and industry protection.

Hong Kong’s Preparations for the First Data Exchange in 2028

Hong Kong is one of the 76 markets committed to implementing CARF and has announced plans to complete its first data exchange by 2028. The submission of this opinion paper by HSFA appears to be part of an effort to successfully fulfill these international commitments while safeguarding the regional industry ecosystem. The future regulatory adjustments and specific implementation timelines by the government are expected to influence the development direction of Hong Kong’s crypto asset industry.