As a researcher, I find myself deeply impressed by the journey and resilience of Julia Leung, CEO of the Hong Kong Securities and Futures Commission (SFC). Her ability to navigate the complex world of cryptocurrencies, balancing innovation with investor protection, is nothing short of remarkable.
Navigating crypto regulations isn’t straightforward when you support the technology but not the fraudulent activities and market manipulations it sometimes entails. It’s a delicate balance that Julia Leung, CEO of the Hong Kong Securities and Futures Commission (SFC), has had to maintain over the past few years.
At a summer conference in town, she emphasized that despite ongoing debates about Bitcoin‘s inherent worth, it has persisted through various ups and downs over the past 15 years, proving its resilience as a unique financial asset. Furthermore, she highlighted that the technology underlying Bitcoin, or Distributed Ledger Technology (DLT), is undoubtedly going to be a long-term fixture.
However, Leung expressed stronger criticism towards NFTs. He stated, “A significant divide has formed between non-fungible tokens (NFTs), the metaverse, and tangible assets…To illustrate this, consider the Bored Ape Yacht Club (BAYC). At its launch in 2021, it generated a lot of excitement, but recently, both its minimum price and trading activity have noticeably declined.
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This contrast between what is and isn’t valuable in crypto has been central to how the SFC has tried to regulate crypto in Hong Kong over the last few years, and Leung has been right at the center of this discussion.
In January 2023, Leung assumed the role of CEO at SFC, marking the first time a woman had led the regulatory body since its founding in 1989. This appointment happened concurrently with a crucial juncture for Hong Kong as it aimed to become a significant hub for cryptocurrency and web3 technologies.
Not long after Leung assumed leadership at the SFC, they published a discussion document concerning regulated digital asset platforms catering to retail clients.
In June of 2023, the paper paved the way for the establishment of a complete licensing system for providers of virtual asset services (VASPs). This step enabled retail trading for a limited set of cryptocurrencies under tight security measures, demonstrating Leung’s dedication to fostering innovation while ensuring investor safety.
The action has seen varying outcomes… A number of global trading platforms, such as OKX and the rebranded Huobi (HTX), decided against participating in the licensing system at the eleventh hour. Nevertheless, despite having three companies with full licenses within the city, traders persist in using unregulated international platforms for their transactions.
JPEX’s Fall
Apart from dealing with various issues related to cryptocurrencies, Leung also encountered a particularly severe test: the shutdown of JPEX, an unauthorized cryptocurrency platform. This event transpired in the beginning of 2023, after it was revealed that the SEC (Securities and Exchange Commission) had launched an investigation against it.
The Securities and Futures Commission (SFC) faced intense criticism due to its inability to safeguard customers, resulting in more than 2,600 individuals suffering losses exceeding $200 million. However, no one has been indicted so far for any wrongdoings linked to the transactions that have taken place on the platform.
JPEX introduced a fresh strategy at the SFC regarding the dissemination of information to the public. This new approach includes making public the names of applicants for the VATP licensing system, a practice they hadn’t engaged in before. Additionally, they began posting suspicious platforms on their website.
Under Leung, the Securities and Futures Commission (SFC) is not only focusing on exchanges but also taking actions to bring more transparency for market participants. These steps involve tackling issues like regulations for stablecoins and over-the-counter (OTC) trades.
Leung’s Background
Leung’s regulatory style is influenced by her background in financial monitoring, strategy creation, and global collaboration. Upon joining the SFC in 2015, she has assumed various critical roles such as the Executive Director of both the Investment Products Division and the Intermediaries Division. In 2018, she was promoted to Deputy CEO.
Over the past 25 years, Leung’s career in public service has been extensive. It all started at the Hong Kong Monetary Authority (HKMA), which is equivalent to the city’s central bank. She spent a significant portion of 14 years there. During her time at HKMA, Leung played a crucial role in nurturing financial partnerships with Mainland China and international regulatory bodies, serving as Executive Director for the final eight years of her service. From 2008 to 2013, she further refined her skills as Under Secretary for Financial Services and the Treasury, during which she played a key part in defining Hong Kong’s financial policies following the global financial crisis.
Leung’s term as the head of the SFC ends in December 2025, and there’s an opportunity for her to serve another three years if she is chosen for renewal.
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2024-12-10 18:43