News Updates

Find out all about our firm’s latest news updates below. To learn more about any individual item, please contact us here.

2 Dec 2022

(中文) 合伙人徐凯怡律师参与新加坡仲裁协会（SIArb）40周年晚宴

(中文) 2022年11月30日，本所合伙人，诉讼及争议解决部主管徐凯怡律师参与了新加坡仲裁协会（SIArb）于新加坡富丽敦酒店举行的40周年晚宴。

本次晚宴邀请了新加坡文化、社区及青年部长兼律政部第二部长唐振辉资深大律师（Edwin Tong SC）担任嘉宾。另外，唐律师亦是华社联络组主席和人民协会副主席。

新加坡文化、社区及青年部长兼律政部第二部长唐振辉资深大律师为晚宴致辞

左起: 香港仲裁师协会会长邝志强律师太平绅士，新加坡文化、社区及青年部长兼律政部第二部长唐振辉资深大律师和本所合伙人徐凯怡律师

国际商会 (ICC) 国际仲裁院顾问Ms. Hazel Tang (左) 和本所合伙人徐凯怡律师 (右)

新加坡仲裁协会主席郑裕能律师 (左三) 和本所合伙人徐凯怡律师(左一)

若阁下想了解更多详情，请联络本所合伙人徐凯怡律师。

Posted by Editor

30 Nov 2022

(中文) 纳斯达克股份市场的监管讯息更新

This entry is only available in 中文.

Posted by Editor

23 Nov 2022

THE HONG KONG MONETARY AUTHORITY PUBLISHED THE POSITION PAPER CHARTING THE NEXT STEPS OF E-HKD

Introduction

The Hong Kong Monetary Authority (“HKMA”) released a position paper titled “e-HKD: Charting the Next Steps” on 20 September 2022 (the “Position Paper”) to set out its policy stance on retail Central Bank Digital Currency (CBDC), i.e. e-HKD, and outline its next steps. Based on the findings and comments received from the technical whitepaper titled “e-HKD: A technical perspective” published in October 2021 and the policy discussion whitepaper titled “e-HKD: A policy and design perspective” published in April 2022, the HKMA considers it necessary to start paving the way for possible future implementation of e-HKD. In this news update, we will focus primarily on the development of e-HKD, its legal status, and relevant features contemplated under the Position Paper.

Charting the Next Steps of e-HKD

Set out below is the approach and model envisaged by the HKMA to implement e-HKD as discussed in the Position Paper:-

Three-rail Approach

The HKMA will adopt a “three-rail approach”, by exploring the phases to promote and prepare for the launch of e-HKD in Hong Kong:¹

Rail 1 – laying the technology foundation to suit different design choices and legal foundations for issuance of digital form of fiat currency

Rail 2 – deep-dive research on use cases and designs, such as projects on access to e-HKD via e-wallet app, cybersecurity, DvP settlement of tokenised securities

Rail 3 – rolling out e-HKD

Two-tier Distribution Model

It consists of two separate, connected layers, namely, the wholesale interbank system and the retail user wallet system.

The HKMA favours the adoption of a two-tier distribution structure.

The HKMA would first proceed to develop the wholesale, interbank tier (wholesale layer). The target is to develop a technical foundation that can suit different design choices for the retail layer with relatively little modification further down the road.

The HKMA will explore with retail payment market participants whether and how e-HKD can fill any gaps in the existing market. ²

Features of e-HKD

As explained in the Position Paper and the whitepapers, e-HKD should have the following various features:-

Legal Tender Status	The HKMA is currently inclined to the view that e-HKD should be accorded legal tender status, to ensure alignment in status between the digital form and the physical form of legal tender currency/bank notes (issued under the Legal Tender Notes Issue Ordinance) and coins (issued under the Coinage Ordinance), these ordinances will be amended to give effect to e-HKD’s legal tender status. This means, absent any contractual term to the contrary, e-HKD as legal tender, would by law be regarded as a valid and legal means of tendering payment for an incurred debt. ³ The HKMA considers that by assigning e-HKD as a legal tender with an unambiguous legal foundation for issuance, public confidence in e-HKD will be fostered. As is the present case of physical currency, contracts allow parties to commercial transactions to determine their means of payment, thus the law would not compel goods or service providers to accept e-HKD as payment, or prohibit a person from contractually refusing to accept e-HKD as payment. ⁴
Cybersecurity and Anti-Counterfeiting	The HKMA believes that cybersecurity is of utmost importance to maintain public trust in e-HKD, with the majority of respondents to the technical white paper agreeing that cybersecurity needs to take precedence over efficiency for CBDC platforms.⁵ On the other hand, there is a concern over counterfeit e-HKD. In order to secure the authenticity and restrict the “double-spending” of e-HKD, technology-based measures should be considered.⁶ Moreover, the HKMA suggests criminalising the counterfeit of e-HKD by adopting a digital equivalent of the current anti-counterfeiting provisions to protect and bolster confidence in e-HKD. ⁷ In particular, it is a criminal offence under Section 103 of the Crimes Ordinance to “reproduces on any substance… any Hong Kong currency note” without the consent of the HKMA.
Interoperability	With multiple countries releasing their own CBDC, the HKMA considers it important that e-HKD should, so far as practicable, be fully interoperable with other payment systems which would enable the public to make more efficient payments without impediment. Moreover, the HKMA would also consider connectivity and the possibility to adopt future innovations in facilitating cross-platform payment and future development.⁸
Anti-Money Laundering (AML)/Counter Terrorist Financing (CFT) Regulations	The HKMA agrees that regulatory and compliance standards would be duly regarded in the design architecture of e-HKD.⁹ In line with the “same risk, same regulation” principle, ¹⁰ it also agrees that existing requirements under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and the Payment Systems and Stored Value Facilities Ordinance should apply to transactions using e-HKD as far as possible, with intermediaries being responsible for meeting the AML/CFT requirements.
Data Privacy Protection	There is a question over what parties (e.g. central bank, wallet operators/banks and merchants) should have access to what degree of information (e.g. user identity, transaction history), and of particular importance is the degree of anonymity vis-à-vis the central bank. The overarching principle is that the e-HKD system should at all times comply with the Personal Data (Privacy) Ordinance and relevant codes of practice, guidelines and best practices issued by the Office of the Privacy Commissioner for Personal Data.¹¹ Privacy and data protection should be embedded in its system design and operation, while ensuring effective AML/CFT controls.
Tiered-account Structure	The HKMA would take note of the suggestions that e-HKD should come with a “tiered-account” structure, i.e. different levels of transaction/holding limits or functions depending on the level of KYC, to strike a balance between factors such as usability and privacy.¹²

Analysis and Takeaway

The regulators have been relatively proactive in the Fintech scene, rolling out various new regimes and guidance. With the rapid development in Fintech and VAs, the Hong Kong Government, the Securities and Futures Commission (“SFC”) and the HKMA have consistently strived to set up an effective regulatory framework for the Fintech industry in Hong Kong to prosper. The Position Paper on e-HKD is one of the many examples in this aspect.

Indeed, the Hong Kong Government has been active in establishing the regulatory framework for the Virtual Assets (“VA”) market, including the gazettal of the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 to introduce a new licensing regime for VA service providers (“VASPs”) which will take effect on 1 March 2023. In addition to the initial step to allow VA access under the new licensing regime. On the same day as the Financial Services and the Treasury Bureau announced its Policy Statement on Development of Virtual Assets in Hong Kong, the SFC also published a circular on the VA futures exchange traded funds (ETFs) in Hong Kong. ¹³

Since e-HKD is a digital form of legal tender, the Government believes the significance of e-HKD lies in its potential to serve as the potential “backbone” and anchor bridging legal tender and VA. ¹⁴ The HKMA also puts “DvP settlement of tokenised securities in its pipeline of projects for e-HKD. This would offer settlement efficiency, price stability and confidence to empower more innovations in the field of security token offerings and different types of VA, which in turn increases the competitiveness of the Hong Kong VA market and attract VASPs to operate and settle in Hong Kong. This has the potential of significantly enhancing Hong Kong’s payment efficiency through interoperability and synchronisation with the Faster Payment System (FPS). We welcome such development and look forward to the future enhancement and development of the Hong Kong Fintech ecosystem as a whole.

Please contact our Partner Mr. Rodney Teoh and our Associate Calvin KW Lo for any enquiries or further information.

This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

¹ HKMA Position Paper “eHKD – Charting the Next Steps” pp. 9-11
² HKMA Position Paper “eHKD – Charting the Next Steps” pp. 8, 10
³ HKMA Position Paper “eHKD – Charting the Next Steps” p. 36
⁴ HKMA Position Paper “eHKD – Charting the Next Steps” p. 37
⁵ HKMA Position Paper “eHKD – Charting the Next Steps” p. 7
⁶ HKMA paper “e-HKD: A policy and design perspective” p. 35
⁷ HKMA paper “e-HKD: A policy and design perspective” p. 35
⁸ HKMA Position Paper “eHKD – Charting the Next Steps” pp. 15-16
⁹ HKMA Position Paper “eHKD – Charting the Next Steps” p. 18
¹⁰ HKMA Position Paper “eHKD – Charting the Next Steps” p. 29
¹¹ HKMA paper “e-HKD: A policy and design perspective” p. 33
¹² HKMA Position Paper “eHKD – Charting the Next Steps” p. 22
¹³ SFC. Circular on Virtual Asset Futures Exchange Traded Funds.
¹⁴ The Financial Services and the Treasury Bureau. Policy Statement on Development of Virtual Assets in Hong Kong.

Posted by Editor

10 Nov 2022

Partner Milly Hung and Senior Associate Michael Lau Delivered a Seminar on Cyber Risk Management

On 4 November 2022, our Partner Milly Hung and Senior Associate Michael Lau delivered a hybrid seminar on “Walk through the end-to-end journey in Cyber Risk Management to get you up to speed”. They shed light on the legal issues of current cybersecurity practices, including the Hong Kong Monetary Authority’s and Insurance Authority’s compliance guidelines on cybersecurity, Personal Data (Privacy) Ordinance (“PDPO”), and the General Data Protection Regulation (“GDGR”). The seminar also invited an experienced Cyber-Security Lead in FSI (Financial Service Industry), Mr. Anthony Cheng, to explain the different types of cyberattacks and the available tools/means to tackle in Hong Kong.

From the left: Guest Speaker Mr. Anthony Cheng, our Partner Milly Hung and Senior Associate Michael Lau

For more information, please contact our Partner Milly Hung.

Posted by Editor

8 Nov 2022

Stevenson, Wong & Co. Invited by Legal 500 as Exclusive Contributor to “Overview of The Hong Kong Fintech and Blockchain Landscape”

Our Partner Rodney Teoh and his team members, Associate Angela Lau and Paralegal Calvin KW Lo, have recently been invited to be the exclusive contributor to the article “Overview of The Hong Kong Fintech and Blockchain Landscape”, published by The Legal 500: Fintech Country Comparative Guide 2022.

In the article, Rodney and his team explained how Hong Kong Government and the regulators strive to set up an effective regulatory framework for the Fintech industry in Hong Kong by introducing new regimes and pilot projects for token offerings, virtual assets service providers, e-payment services, e-HKD, and more.

About The Legal 500 Country Comparative Guides

The Legal 500 Country Comparative Guides invite the world’s renowned and leading lawyers to contribute chapters on various fields in different country. The Hot Topic articles aim to provide analysis of the latest trends and developments to provide readers with a deeper understanding of the laws and regulations in different key jurisdictions.

Please click here to read the full article on The Legal 500’s website.

For more information, please contact our Partner Rodney Teoh.