Hong Kong’s Financial Services and Treasury Bureau (FSTB) has introduced a dual-track policy for artificial intelligence (AI) use within the financial sector, aiming to strike a balance between innovation and risk management. Meanwhile, the Securities and Futures Commission (SFC) is set to release new regulations for cryptocurrency over-the-counter (OTC) trading.
On October 28, the FSTB—responsible for shaping Hong Kong’s finance and treasury policies—outlined its approach to AI adoption. This framework encourages AI integration across the financial industry while addressing potential challenges associated with the technology.
The FSTB noted that Hong Kong’s financial services industry is open to adopting AI to drive improvements in efficiency, security, and customer service. To promote safe AI growth, the bureau proposed a “dual-track approach,” combining regulatory oversight with industry-led initiatives.
Encouraging Collaboration for AI Adoption
To foster responsible AI usage, the government plans to collaborate with financial regulators and industry stakeholders. According to the FSTB report, “AI adoption is a balancing act—capturing opportunities while mitigating risks.”
The policy statement identified six key benefits of AI in finance, including enhanced research and data analysis, strategic investment building, improved customer service, automated risk management, crime detection and prevention, and streamlined workflow automation.
AI is already transforming various sectors in Hong Kong, such as banking, securities, insurance, accounting, pension management, and green finance initiatives. To support responsible AI deployment, Hong Kong will establish a supervisory framework that considers risks related to job displacement, intellectual property rights, and stakeholder protections.
SFC to Provide AI Guidelines for Financial Institutions
The Hong Kong SFC will release a circular in November detailing compliance obligations, risks, and regulations specific to AI adoption for financial institutions. This initiative will provide clarity for institutions incorporating AI in their operations.
Strengthening Crypto Regulations for OTC Trading
In addition to AI oversight, the SFC is working with the Customs and Excise Department (C&ED) to introduce a new licensing framework for cryptocurrency OTC services. This framework, which is anticipated by year’s end, will guide companies offering private crypto transactions in Hong Kong.
Originally, crypto OTC services were to be regulated solely by the C&ED under a February proposal, but the SFC has since expanded its involvement. The dual regulatory approach will allow the SFC and C&ED to jointly oversee OTC crypto activities, reinforcing Hong Kong’s commitment to a secure and transparent financial environment.
Hong Kong’s policies reflect a concerted effort to integrate AI and crypto advancements within a structured regulatory landscape, promoting growth while safeguarding stakeholders.
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