Regulating crypto is not an easy brief when you back the technology but not the scams and speculation that come with it. It’s a tightrope that Julia Leung, the CEO of the Hong Kong Securities and Futures Commission (SFC), has had to walk the past several years.
“While the intrinsic value debate will continue, it is a fact that 15 years on, Bitcoin has survived multiple cycles of boom and bust, clearly showing its staying power as an alternative asset. More clearly, its underlying technology –– DLT –– is here to stay,” she said at a conference in the city this summer.
But Leung had harsher words for NFTs. “So far, a deep gulf has emerged between non-fungible tokens (NFTs), the metaverse and real-world assets…Take the well-known Bored Ape Yacht Club (BAYC) as an example. Its release was all the hype back in 2021, but both its floor price and trading volume have plummeted of late.”
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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.
Taking the helm as SFC CEO in January 2023, Leung became the first woman to lead the regulator since its inception in 1989. The start of her tenure coincided with a pivotal moment for Hong Kong as it sought to establish itself as a hub for crypto and web3.
Shortly after Leung took the reins at the SFC, the commission released a consultation paper on regulated virtual asset platforms serving retail users.
The paper was a precursor to the implementation of a comprehensive licensing regime for virtual asset service providers (VASPs) in June of 2023. The move allowed retail trading for a select group of cryptocurrencies under stringent safeguards, reflecting Leung’s commitment to balancing innovation with investor protection.
The move has had mixed success.. Several international exchanges pulled out of the licensing regime at the last minute, including OKX and HTX (formerly Huobi). And while there are now three companies holding full licenses in the city, traders continue to use unlicensed international platforms.
JPEX’s Fall
Leung has faced other crypto-related challenges as well. One of the most significant tests came with the collapse of JPEX, an unlicensed crypto platform that abruptly ceased operations in early 2023 following the announcement that the SEC was investigating it
The SFC was heavily criticized for failing to protect customers, with over 2,600 victims losing over $200 million. Despite over 70 arrests, nobody has been charged in connection with the exchange to date.
JPEX ushered in a new approach at the SFC with respect to how it shared information with the public, including publishing the names of applicants for the VATP licensing regime, which it had previously declined to do. It also started to list suspicious platforms on its website.
Beyond exchanges, under Leung the SFC has also made steps towards providing greater clarity for industry players, addressing areas such as stablecoin regulations and over-the-counter (OTC) trading.
Leung’s Background
Leung’s approach to regulation has been shaped by her experience in financial oversight, policy development and international cooperation. Since joining the SFC in 2015, she has held several key positions, including Executive Director of the Investment Products Division and the Intermediaries Division. In 2018, she was appointed Deputy CEO.
Meanwhile, her career in public service spans over 25 years, beginning at the Hong Kong Monetary Authority (HKMA) — the city’s central bank — where she spent 14 years. At the HKMA, Leung was instrumental in fostering financial cooperation with Mainland China and international regulators, serving as Executive Director for the last eight years of her tenure. And from 2008 to 2013, she further honed her expertise as Under Secretary for Financial Services and the Treasury, where she played a pivotal role in shaping Hong Kong’s financial policies during the aftermath of the global financial crisis.
Leung’s current tenure as head of SFC will expire at the end of 2025, after which time she’s eligible to be renewed for another three-year term.
