External assessment reports for licence applications

The virtual asset trading platform applicant (VATP applicant) should exercise due skill, care and diligence in selecting and appointing an EA. It should ensure that the EA (i) possesses adequate and necessary expertise, technical knowledge and relevant experience in reviewing and assessing the operations of a VATP applicant, and (ii) thoroughly understands the legal and regulatory requirements for an SFC-licensed VATP.

An EA should fulfil the following criteria in order to be considered as eligible:

As the SFC expects the external assessments to be conducted by a qualified practitioner, performed as a direct assurance engagement, and signed off by a certified public accountant (practising), an EA should be an independent professional accounting firm regulated by the Accounting and Financial Reporting Council which is required to comply with applicable standards and frameworks related to assurance engagements, such as HKSAE 3000, code of ethics, and other professional requirements, law and regulations.
The EA should be independent from the VATP applicant, its group or group companies. Also, it should not be a service provider of any systems adopted by the VATP applicant (such systems being those subject to the external assessments).
The EA should possess expertise, technical knowledge, relevant experience and track record in reviewing policies, procedures, systems and controls of intermediaries conducting similar business activities, and possess expertise and technical knowledge in conducting such reviews in light of the additional risks arising from virtual asset activities.
The EA should be capable, whether through different teams within the EA or not, of providing recommendations and advice to the VATP applicant on remediating any findings or deficiencies noted in the external assessment.

A: A VATP applicant is required to submit documentation to show to the SFC’s satisfaction that a suitable EA has been identified to perform an external assessment for the VATP applicant. This documentation should include a statement on the EA’s capabilities and competence to demonstrate its eligibility, together with the licensing application bundle, and be submitted through WINGS to the SFC. The documentation should also include a copy of the VATP applicant’s request for proposal issued to the EA, and an indication of interest that the EA will perform an external assessment for the VATP applicant. If the EA will deploy personnel from its overseas affiliates to assist with the external assessment, the capability statement should also cover information about these affiliates and their personnel.

If in the opinion of the SFC the EA does not appear eligible or otherwise suitable to perform the external assessment for the VATP applicant (please refer to Question 4 for details of the eligibility criteria), the SFC may oppose or raise material concerns regarding the appointment of the EA by the VATP applicant and accordingly return the application to the applicant.