In a bid to establish itself as a global crypto hub, Hong Kong has adapted its regulations to counter the scarcity of a vital crypto industry position – the Responsible Officer (RO). The city-state has initiated these changes, set to launch on June 1, in response to industry concerns about the talent crunch.
A recent provision may allow licensed crypto platforms to employ fewer ROs, a move aimed to ease the recruitment process for crypto companies seeking licensing under the new framework. This skill gap has threatened Hong Kong’s position in the global crypto landscape, adding to the city’s recovery challenges from political disturbances and Covid restrictions.
ROs play a significant role in Hong Kong’s comprehensive financial services regulation system. With the requirement of having two executives for each type of license, this structure is also implemented for the digital asset framework.
Also Read: Breaking Boundaries: Indian Entrepreneur Aman Gupta’s Historic Moment at Cannes
ROs carry an enormous responsibility. They must be licensed by the Securities and Futures Commission (SFC), possess relevant experience and product knowledge, and ensure their companies’ compliance with regulations. Breach of these rules can result in civil and criminal penalties.
The scarcity of ROs with blockchain technology experience and a Type 7 license – a crucial requirement for crypto exchanges – adds to the recruitment challenge. Out of approximately 18,000 ROs in Hong Kong, only 95 hold this type of license.
The SFC has hinted at a pragmatic approach to tackle this issue by allowing a single individual to serve as an RO under both securities and anti-money laundering ordinances during the transition. The regulator anticipates this move will reduce the number of ROs required by virtual asset trading platforms.
Also Read: AXA Teams Up with Klook to Launch Comprehensive Car Rental Insurance for Global Travellers
The hiring of ROs from traditional finance has been hampered by the perceived riskiness of the crypto industry. To attract these professionals, companies are having to offer incentives, including salary premiums up to 20% higher than traditional finance roles.
Hong Kong is working to mitigate the talent gap by considering technically proficient individuals in crypto and blockchain for RO roles, even if they lack strictly financial qualifications. However, these technically adept ROs are required to pair with a colleague possessing relevant financial experience.
While this approach shows promise, Hong Kong faces a unique challenge in attracting remote-friendly professionals, as local securities law mandates at least one RO to be physically present at all times to oversee licensed businesses. This news is based on The Edge Malaysia.
