Hong Kong SFC Launches “A-S-P-I-Re” Roadmap to Shape the Future of Virtual Asset Regulation
On 19 February 2025, the Hong Kong Securities and Futures Commission (HK SFC) launched the “A-S-P-I-Re” roadmap, launched a five pillar framework, mapping the Virtual Asset Ecosystem, its Composition, Dynamics, and the Imperative for Strategic Regulation of Hong Kong’s virtual asset (VA) regulations. The roadmap introduces 12 initiatives across five core pillars: Access, Safeguards, Products, Infrastructure, and Relationship, to create clear licensing frameworks, improve compliance, and enhance market integrity.
- The roadmap aims to introduce a clear licensing for VA OTC trading and custody services, to enhances compliance requirements for VASPs, to improve security and risk management practices.
- It aims to strengthens custody rules and security mandates to mitigate fraud and cyber risks and implements risk-based oversight mechanisms.
- As per the A-S-P-I-Re Roadmap, the HKSFC plans to expand regulated token listings, VA derivatives, and staking services, with a focus on institutional investors. It also discusses further development of VA exchange-traded funds (ETFs) following Asia’s first spot VA ETF approvals.
- The HKSFC aims to upgrades market surveillance systems, reporting mechanisms, and regulatory coordination to detect financial crime and implement new transparency measures to support responsible innovation.
- The “A-S-P-I-Re” roadmap aims to integrate virtual assets into the financial system by addressing liquidity fragmentation, security risks, and regulatory arbitrage. The roadmap will be implemented in phases, with regulatory developments expected by the end of 2025.
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UK FCA and PSR Assess Impact and Competition Concerns in Digital Wallet Market in United Kingdom and Published Feedback Statement
On 19 February 2025, the United Kingdom Financial Conduct Authority (UK FCA) and the United Kingdom Payment Systems Regulator (UK PSR) published a joint Feedback Statement FS25/1: Big tech and digital wallets assessing the competition and innovation landscape within the digital wallets market. The UK FCA & PSR published statement after the UK’s Competition and Markets Authority (CMA)’s floated an Invitation to Comment on its Strategic Market Status Investigations focusing on the dominance of Apple and Google in the mobile payment ecosystem. The UK FCA and UK PSR analysed industry feedback and regulatory concerns, discussing the sector’s rapid growth, consumer benefits, and barriers to market entry.
- The UK FCA and UK PSR have referred competition concerns to the CMA, which is investigating Apple and Google’s market influence. Market dominance of major players like Apple and Google may hinder competition and limit consumer choice
- Engagement with UK Treasury will ensure payment regulations remain adaptable to technological advancements.
- UK FCA noted that further assessments will explore open access to digital wallets and potential regulatory interventions to promote fair competition.
- The European Commission’s regulatory approach to NFC technology was referenced as a possible model for the UK digital wallet market.
- Competition and Market Concerns as raised by the UK’s Competition and Markets Authority elaborate on how barriers to entry for new digital wallet providers may restrict market innovation on Near Field Communication (NFC) technology access, affecting fair competition.
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United States SEC Establishes Cyber and Emerging Technologies Unit to Strengthen Investor Protection
On 20 February 2025, the United States Securities and Exchange Commission (US SEC) announced the creation of the Cyber and Emerging Technologies Unit (CETU) to enhance enforcement against cyber-related fraud and protect retail investors from financial misconduct in the artificial intelligence (AI), blockchain, and digital finance sectors. Replacing the Crypto Assets and Cyber Unit, CETU will be led by Laura D’Allaird and will consist of approximately 30 fraud specialists and attorneys across multiple SEC offices.
- Expanded Enforcement Scope: CETU aims to targets fraudulent and illicit use of AI and machine learning in securities transactions.
- US CETU will investigate cyber-related financial fraud, including phishing schemes, dark web activities, and social media-driven scams.
- It also aims to address hacking and insider trading, specifically related to theft of material nonpublic information (MNPI), to strengthen oversight of retail brokerage account takeovers.
- CETU will oversee Cybersecurity Compliance & Governance of regulated entities’ adherence to cybersecurity laws and financial risk management frameworks, with the authority to hold public issuers accountable for cybersecurity risk disclosures, investigating cases where companies fail to disclose material cyber incidents or vulnerabilities.
- US CETU will review ongoing investigations and initiate new enforcement actions against cyber-related financial misconduct.
- The unit will complement the work of the US SEC’s Crypto Task Force, and will be led by Commissioner Hester Peirce.
- The US SEC’s CETU is now operational and will strengthen the cybersecurity oversight, digital asset enforcement, and investor protection in emerging financial technologies.
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Germany’s BaFin Announces New Regulatory Framework for Crypto-Asset Service Providers in view of MiCAR
On 21 February 2025, Germany’s Federal Financial Supervisory Authority (BaFin) announced the enforcement of EU Markets in Crypto-Assets Regulation (MiCAR) requirements for crypto-asset service providers (CASPs). The new framework requires CASPs to secure authorisation from BaFin, comply with MiCAR based operational and security standards, and submit well-prepared applications within strict regulatory deadlines. EU MiCAR introduces harmonised rules across the European Union (EU).
- All CASPs, including crypto custodians, trading platforms, and portfolio management firms, must obtain BaFin authorisation under EU MiCAR.
- EU MiCAR enables authorised CASPs to operate across the EU without separate national approvals, provided they submit a passporting notification to BaFin.
- Firms licensed under Germany’s Banking Act Kreditwesengesetz – KWG may continue operations but must reapply under MiCAR before accessing EU-wide services.
- According to BaFin’s guidelines, CASP licensing applications must include business model viability, IT security compliance, and adhere to the Regulatory Technical Standard (RTS) and Implementing Technical Standard (ITS) under Article 62.
- BaFin emphasised that incomplete or inconsistent applications will be rejected, given EU MiCAR’s limited review timeframe for supervisory assessments.
- EU MiCAR’s transparency, issuance, and supervision requirements took effect on 30 June 2024, while trading, market abuse prevention, and product intervention measures became applicable on 30 December 2024.
- Germany’s BaFin urges CASPs to act promptly to ensure compliance with EU MiCAR and avoid regulatory penalties or operational disruptions.
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US SEC Extends Compliance Deadlines and Grants Temporary Exemption for US Treasury Securities Clearing Rules
On 25 February 2025, the United States Securities and Exchange Commission (US SEC) extended compliance deadlines and issued a temporary exemption through two documents: “SEC Extends Compliance Dates and Provides Temporary Exemption for Rule Related to Clearing of U.S. Treasury Securities” and “Temporary Exemption Regarding Exchange Act Rule 17ad-22(e)(6)(i)” for clearing requirements related to US Treasury securities. Relevant entities are Covered Clearing Agencies (CCAs), broker-dealers, investment funds, and clearing firms, allowing them additional time to implement and comply with regulatory changes. The compliance deadlines for Rule 17ad-22(e)(18)(iv)(A) and (B) have been extended to 31 December 2026 for cash market transactions and 30 June 2027 for repo market transactions. A temporary exemption for Rule 17ad-22(e)(6)(i) extends its enforcement to 30 September 2025, allowing indirect market participants more time to finalise risk models and documentation.
- Relevant Entities Affected by the Changes include:
- Covered Clearing Agencies (CCAs): CCAs are US SEC-registered clearing agencies handling central counterparty services for US Treasury securities.
- Direct Participants include Banks, broker-dealers, and financial entities directly settling transactions through a CCA.
- Indirect Participants include Investment firms, hedge funds, and asset managers relying on direct participants for clearing services.
- Broker-Dealers (subject to US SEC Rule 15c3-3) are financial firms handling customer securities transactions.
- Regulatory Adjustments Required to be made by the relevant entities for Compliance:
- Market participants and relevant entities must align trade submission processes with Rule 17ad-22(e)(18)(iv) to ensure compliance with clearing mandates.
- CCAs must enhance monitoring procedures to enforce clearing requirements effectively.
- Operational processes and risk management frameworks must be updated to integrate new compliance obligations.
- Indirect participants should finalise risk model adjustments and legal documentation before the margin separation rule enforcement in September 2025.
- Extended Compliance Deadlines:
- 31 December 2026 is the new deadline for clearing cash-market US Treasury transactions under Rule 17ad-22(e)(18)(iv)(A) & (B).
- 30 June 2027 is the updated deadline for clearing repo transactions in US Treasury securities under Rule 17ad-22(e)(18)(iv)(A) & (B).
- 30 September 2025, is the temporary exemption deadline for margin separation requirements, giving Covered Clearing Agencies time to enforce segregated margin accounts under Rule 17ad-22(e)(6)(i).
- 31 March 2025 for broker-dealer customer protection rule amendments (Rule 15c3-3) related to US Treasury securities remains unchanged.
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UK FCA Confirms September 2027 Trial for £64 Million WealthTek Fraud and Money Laundering Case
On 25 February 2025, the United Kingdom Financial Conduct Authority (UK FCA) confirmed that the criminal trial of John Dance, former principal partner of WealthTek LLP, has been scheduled for September 2027 at Southwark Crown Court, where it will hear and decide allegations of fraud and money laundering relating to the misappropriation of £64 million in customer funds between 2014 and 2023.
- John Dance is accused of nine offences, including fraud by abuse of position, fraud by false representation, and converting or transferring criminal property under UK fraud and financial crime laws.
- The charges were initially brought in December 2024 by UK FCA, following an investigation into fraudulent activities at WealthTek LLP.
- At the 24 February 2025 hearing at Southwark Crown Court, Dance pleaded not guilty to all charges.
- The case is being prosecuted under the UK Fraud Act 2006 and the UK Proceeds of Crime Act 2002, which provide for criminal penalties, asset confiscation, and financial sanctions if convicted.
- The trial is set for September 2027, with severe financial and custodial penalties possible if Dance is found guilty.
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ASIC Releases Discussion Paper on Australia’s Evolving Capital Markets: Regulatory Challenges and Investment Trends
On 26 February 2025, the Australian Securities and Investments Commission (ASIC) released a discussion paper titled “Australia’s Evolving Capital Markets: A Discussion Paper on the Dynamics Between Public and Private Markets“ The discussion paper examines the increasing shift from public to private markets, evaluating investment trends, regulatory challenges, and the implications for financial institutions and investors. ASIC is seeking feedback by 28 April 2025 to determine whether current regulations adequately support both market structures and to explore potential reforms that enhance market efficiency, transparency, and investor protection.
- ASIC discussed a reduction in IPOs, prompting an assessment of whether market structure changes or economic cycles are driving the shift.
- The paper discusses how private capital markets are expanding, raising concerns over valuation risks, liquidity constraints, and regulatory oversight.
- ASIC noted that superannuation funds are playing a central role in capital formation, influencing financial flows within Australia’s investment ecosystem.
- ASIC is evaluating whether additional oversight is required, regarding risk disclosure, valuation practices, and investor protection mechanisms in private markets.
- The paper considers proposed regulatory changes to enhance market transparency, competition, and capital access for companies and investors.
ASIC will review stakeholder submissions after 28 April 2025 and provide an update later in the year by considering the needs of both public and private market participants.
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