Virtual asset-related products are expected to be included in the "Cross-border Wealth Management Connect"

Author: Bowen

On January 22, 2025, the official website of the Central People's Government of the People's Republic of China showed that the People's Bank of China, the Ministry of Commerce, the State Administration of Financial Supervision, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the "Opinions on Piloting the International High Standards in the Financial Sector in the Conditional Free Trade Pilot Zone (Hong Kong) to Promote Institutional Opening", opening a new round of financial opening.

The opinions put forward 20 policy measures, including supporting the optimization of the "Cross-border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area and allowing foreign financial institutions to provide new financial services. Among them, three points are focused on:

• Allow Chinese and foreign institutions to carry out new financial services, that is, financial services that are not provided in my country but have been provided and regulated in other countries or regions;

• Continue to optimize the "Cross-border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area, support mainland residents in the Guangdong-Hong Kong-Macao Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macao financial institutions through Hong Kong and Macao financial institutions; expand the scope of participating institutions and qualified investment products;

• On the premise of being authentic and compliant, all transfers related to foreign investors' investments in the pilot areas that are authentic and compliant are allowed to be freely remitted in and out without delay. Such transfers include: capital contributions; profits, dividends, interest, capital gains, royalties, management fees, technical guidance fees and other fees.

Under the new policy, virtual asset-related products may be included in the cross-border wealth management; at the same time, it creates new possibilities for the combination of blockchain technology and traditional finance. Especially in the field of RWA, the cooperation between foreign financial institutions and blockchain companies is expected to become an important way for domestic companies to expand financing channels.

The following is the original text of the opinion:

In order to thoroughly implement the spirit of the Central Financial Work Conference, implement the "Several Measures on Piloting the Docking of International High Standards in Conditional Free Trade Pilot Zones and Free Trade Ports to Promote Institutional Opening-up" and the "Overall Plan for Comprehensively Docking of International High-standard Economic and Trade Rules to Promote the High-level Institutional Opening-up of the China (Shanghai) Pilot Free Trade Zone", the following opinions are put forward on piloting the docking of international high standards in the financial field in conditional free trade pilot zones and free trade ports and other regions to promote institutional opening-up.

(Including Shanghai, Guangdong, Tianjin, Fujian, Beijing Free Trade Pilot Zone and Hainan Free Trade Port, and Hengqin Guangdong-Macao Deep Cooperation Zone, Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, Guangzhou Nansha and other important cooperation platforms open to Hong Kong and Macao, which have been clearly deployed by the CPC Central Committee and the State Council and undertake important tasks of opening up, hereinafter collectively referred to as pilot areas)

Allow foreign financial institutions to carry out new financial services of the same type as those of Chinese financial institutions

(I) The new financial services referred to in this opinion refer to financial services that are not provided in my country but have been provided and regulated in other countries or regions.

The development of new financial services shall follow the principle of internal and external consistency. Except for specific new financial services involving national security, financial security and other factors, if Chinese financial institutions are allowed to carry out such services, foreign financial institutions in the pilot areas shall be allowed to carry out such services.

The specific forms of the development of new financial services may be licensing or pilot forms.

(II)If a new financial service is provided in the form of a license, the financial management department may determine the type and nature of the institution that provides this new financial service in accordance with the principle of internal and external consistency and require that the provision of this service requires a license.

The financial management department shall make a decision within a reasonable period of time and may only refuse to grant a license for prudential reasons.

(III)If a new financial service is provided in the form of a pilot program, foreign financial institutions that meet the conditions shall be actively supported to participate and foreign financial institutions shall not be excluded from the scope of the pilot program.

If the pilot program does not include foreign financial institutions, relevant explanations with sufficient reasons shall be provided.

Make a decision on the application of financial institutions to carry out relevant services within 120 days

(IV) In accordance with the principle of internal and external consistency, a decision shall be made within 120 days from the date of acceptance of a complete and legally formal application submitted by an overseas financial institution, an investor of an overseas financial institution, or a cross-border financial service provider to carry out financial services in the pilot area, and the applicant shall be notified in a timely manner.

If a decision cannot be made within 120 days, the applicant shall be communicated and explained in a timely manner. If the time limit prescribed by laws and administrative regulations exceeds 120 days, a decision shall be made within the time limit.

(V)Optimize administrative approval services related to securities and futures financial services.

Revise relevant approval systems and administrative licensing service guidelines and other documents, and shorten the approval period from 180 days to 120 days for domestic and foreign securities companies (including professional subsidiaries of securities companies), public fund management companies, and futures companies to be established in pilot areas.

(VI)Optimize administrative approval services related to banking and insurance financial services. Refine the approval workflow, optimize approval services, and shorten the approval period from 180 days to 120 days for foreign-funded banking business institutions and foreign-funded insurance institutions to be established in pilot areas.

Support legal cross-border purchase of certain types of overseas financial services

(VII)According to my country's commitment to join the World Trade Organization (WTO), the areas currently open under cross-border delivery are: the banking industry allows cross-border provision and transfer of financial information, financial data processing and related software; consulting, intermediary and other ancillary services.

The insurance industry is allowed to provide reinsurance, international marine, air and transport insurance, large commercial insurance brokerage, international marine, air and transport insurance brokerage and reinsurance brokerage.

(VIII) On the premise of authenticity and compliance, enterprises and individuals in the pilot areas may handle cross-border fund settlements such as renewal, claim settlement, and surrender of cross-border insurance policies under current items in accordance with the law.

(IX) Continue to optimize the "Cross-border Wealth Management Connect" pilot program in the Guangdong-Hong Kong-Macao Greater Bay Area, and support mainland residents in the Guangdong-Hong Kong-Macao Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macao financial institutions through Hong Kong and Macao financial institutions. Expand the scope of participating institutions and the scope of qualified investment products, etc.

(10)A special Macao financial services zone will be set up in the Macao New Neighborhood of the Hengqin Guangdong-Macao Deep Cooperation Zone. On the premise of compliance with laws and regulations, explore the provision of relevant financial services to residents of the Macao New Neighborhood under the dual-currency acquiring model of RMB and Macau Pataca.

Facilitate the inward and outward remittance of foreign investors' investment-related transfers

(11)On the premise of authenticity and compliance, all transfers related to foreign investors' investment that are authentic and compliant in the pilot areas are allowed to be freely remitted in and out without delay. Such transfers include: capital contributions; profits, dividends, interest, capital gains, royalties, management fees, technical guidance fees and other fees;

Proceeds from the sale of all or part of an investment, proceeds from the liquidation of all or part of an investment; payments made under contracts, including loan agreements; compensation or indemnity obtained in accordance with the law; and amounts arising from dispute resolution.

(XII)Under the framework of macro-prudential management, continue to improve the convenience of foreign investment transactions throughout the entire process in pilot areas, guide commercial banks to strengthen business review, and confirm that the corresponding funds collection and payment have a real and legal transaction basis.

(XIII)Support pilot areas to include more qualified foreign-invested enterprises in the coverage of the trade and investment facilitation pilot policy, and improve the level of settlement facilitation for foreign-invested enterprises.

(XIV)Build a multifunctional free trade account system in Hainan Free Trade Port and Hengqin Guangdong-Macao Deep Cooperation Zone to improve the level of free and convenient cross-border capital flows.

Improve arrangements for cross-border flows of financial data

(XV)Facilitate and regulate the cross-border flows of data of financial institutions in pilot areas. Under the framework of the national cross-border data transmission security management system, explore the formation of a unified compliance standard for cross-border flows of financial data, clarify the rules for cross-border flows of financial data, and allow financial institutions in pilot areas to transfer data required for daily operations overseas in accordance with the law.

Management measures may be taken for the cross-border transmission of financial data in order to protect data security and personal information security or based on prudent considerations. Explore the establishment of a "white list" system for cross-border circulation of financial data, and include data that has been maturely studied in pilot areas and approved by relevant national departments in the "white list".

In combination with the cross-border transmission needs of financial institutions in the free trade pilot zones, study the list of data that needs to be included in the scope of data outbound security assessment, personal information outbound standard contract, and personal information protection certification management, and efficiently carry out the outbound security assessment of important data and personal information in the financial field.

(16) Formulate rules and standards for the classification and grading of data in the financial sector, study and issue a catalog of important data in the financial sector, urge and guide financial institutions to carry out important data identification declarations and data outbound security assessment declarations, and promote relevant work on cross-border security protection of financial data.

(17) Support financial institutions and payment service providers in pilot areas to study and launch international advanced standards for electronic payment systems, carry out cross-border digital identity authentication and electronic identification, support the introduction of overseas electronic payment institutions in accordance with laws and regulations, and study and improve the digital identity authentication system in line with international standards.

(18) For the import, distribution, sale or use of mass-market financial software (excluding software used for critical information infrastructure in the financial sector) and products containing such financial software, relevant departments and their staff shall not require the transfer or acquisition of the relevant financial software source code owned by enterprises or individuals as a condition.

Comprehensively strengthen financial supervision and effectively prevent and resolve financial risks

(19)Improve the risk monitoring, early warning, prevention and resolution system.

Strengthen the identification of major financial risks and the prevention of systemic financial risks in the pilot areas, strengthen cross-departmental financial supervision coordination in the pilot areas, strengthen the collection, monitoring and use of cross-border payment and receipts business data, increase the crackdown on illegal financial activities, and improve the financial risk emergency response mechanism.

(20)Establish a cross-border dispute resolution mechanism in line with international rules.

Improve the financial consumer rights protection system, support the development of international arbitration and mediation business in the pilot areas, and explore the provision of diversified and international resolution mechanisms for cross-border disputes. Create a one-stop, diversified and international financial dispute resolution platform of "commercial mediation + international arbitration".

This article involves measures on market access liberalization and separate preferential treatment for Hong Kong and Macao services and service providers, which will be implemented under the framework of the Closer Economic Partnership Arrangement (CEPA) between the Mainland and Hong Kong, and between the Mainland and Macao. All relevant departments and pilot areas should strengthen organization and implementation, carry out effectiveness evaluation, summarize experience in a timely manner and replicate and promote it.