Asia Fintech and Payments regulatory update - June 2024

Hong Kong SAR

Digital banking

Expansion of cross-boundary e-CNY in Hong Kong: The Hong Kong Monetary Authority (HKMA) and the People's Bank of China have expanded the scope of the e-CNY pilot for cross-boundary payments in Hong Kong to enable easier setup and top-up of e-CNY wallets via the Faster Payment System (FPS). This marks the first global integration of a faster payment system with a central bank digital currency (in this case the e-CNY), aligning with the G20 Roadmap to enhance cross-border payments.

HKMA to replace “virtual banks” with “licensed digital banks”: According to Arthur Yuen Kwok-hang, deputy CEO of HKMA, the HKMA intends to replace the term “virtual bank” with “licensed digital bank”. This decision affects the eight branchless lenders currently operating in the city. The aim is to eliminate the negative connotations associated with the original term in Chinese (虚拟银行), which translates to “fictional”. To facilitate this transition, the HKMA reportedly commenced a one-month consultation period on 30 April to seek feedback on the proposed name change.

Virtual Assets

PCPD orders Worldcoin to halt operations in Hong Kong: Following completion of the Privacy Commissioner for Personal Data’s (PCPD) investigations into the Worldcoin project (Hong Kong’s iris biometric cryptocurrency project), the PCPD has published its investigation findings and concluded that Worldcoin’s collection of participants’ face and iris images in order for them to qualify for Worldcoin tokens (a cryptocurrency) contravenes various data protection principles under the Personal Data (Privacy) Ordinance (PDPO) in relation to data collection, retention and transparency. The PCPD has served an enforcement notice on Worldcoin Foundation, directing it to cease all operations of the Worldcoin project in Hong Kong through which it has been collecting biometric images of members of the public.

End of non-contravention period for VATPs: The Securities and Futures Commission (SFC) issued a reminder that the “non-contravention period” for virtual asset trading platforms (VATPs) operating in Hong Kong under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance expired on 1 June 2024. This means that all unlicensed VATPs, or those not considered "deemed-to-be-licensed", must now discontinue offering and promoting virtual asset trading platform services within Hong Kong or face criminal sanctions from the regulator. In the coming months, the SFC will conduct on-site inspections of deemed-to-be-licensed VATP applicants to assess their compliance with regulatory requirements.


Shenzhen-HK launches data validation platform: The Shenzhen and Hong Kong authorities announced the launch of the Shenzhen-Hong Kong cross-boundary data validation platform as a pilot to enhance data exchange in the Greater Bay Area. Notably, the platform utilises blockchain technology and data coding (i.e. hash values) for document verification without involving any cross-boundary transfer or storage of original documents. During the first phase of implementation, pilot trials will be conducted with cross-boundary use cases in the financial sector, including validation of credit reference reports and account opening documents. 

Mainland China

Data and cyber

FTZs release data lists for cross-border data transfer: Under the Provisions on Promoting and Regulating Cross-Border Data Flows, China’s free trade zones (FTZs) are authorised to formulate and adopt local preferential policies for organisations within their respective jurisdictions. The Tianjin FTZ released China’s first data Negative List which specifies the categories of data that are subject to a mandatory security assessment by China’s cybersecurity bureau before they can be transferred out of China. The Lingang Special Area of China (Shanghai) Pilot FTZ also issued lists of general data that can be exported effectively without restriction in relation to intelligent connected cars, mutual funds and the biomedical sector. 


Financial regulation landscape

Financial Services and Markets Act 2022 (FSMA): Phase 2A of the implementation of the FSMA commenced on 10 May 2024, introducing (1) new provisions on technology and risk management, and (2) provisions relating to the control and resolution of financial institutions and other miscellaneous provisions migrated from the Monetary Authority of Singapore Act 1970. The remaining phases are targeted to be implemented in the second half of 2024.

Data Governance and Management Practices: Following thematic inspections conducted on the data governance and management frameworks of selected banks, the Monetary Authority of Singapore (MAS) issued an information paper to guide banks and financial institutions in strengthening their data management capabilities, as well as to clarify MAS’ supervisory expectations. Banks are expected to benchmark their data governance and management practices against this paper, and implement measures as appropriate. Other financial institutions are encouraged to adopt the recommended practices where relevant and appropriate.


UK and Singapore strengthen collaboration in Fintech: At the 9th UK-Singapore Financial Dialogue, both countries discussed collaboration opportunities in priority areas such as sustainable finance, fintech and innovation. Particularly in the area of fintech and innovation, the countries exchanged views on their respective approaches to managing risk and capturing opportunities in the digital space, in areas such as: (1) artificial intelligence, (2) cryptoassets, (3) central bank digital currencies, and (4) tokenisation and distributed ledger technology. Views were also exchanged on recent developments in non-bank financial intermediation, and efforts to improve cross-border payment connectivity.

Data and cyber

Singapore launches Green Data Centre Roadmap: At the Asia Tech x Singapore (ATxSG) 2024 summit, Singapore's Deputy Prime Minister, Mr. Heng Swee Keat, introduced the Green Data Centre Roadmap. This strategic plan aims to solidify Singapore's stance as a leader in sustainable digital infrastructure. It also aims to increase energy efficiency and integrate green energy solutions in data centers, paving the way for at least 300 megawatts of additional capacity. This initiative reflects Singapore's commitment to pioneering sustainable growth in the data centre sector on a regional scale.