Hong Kong Grants Retail Investors Access to Licensed Crypto Exchanges

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Key takeaways:

  • The securities watchdog in Hong Kong has unveiled fresh proposals to give regular investors access to platforms for virtual assets.
  • The rules will go into force in June 2023, but no platforms for trading virtual assets with retail investors have been given the SFC’s clearance.

The Hong Kong Securities and Futures Commission (SFC) has declared that licensed platforms will soon be able to cater to ordinary investors. 

The SFC said in a statement on May 23 that owners of virtual asset trading platforms who are ready to follow the SFC’s proposed rules are invited to apply for a license.

The criteria that must be adhered to by virtual asset trading platforms will cover things like asset custody safety requirements, client asset segregation, and cybersecurity requirements, among other things.

According to Julia Leung, CEO of SFC, establishing precise regulatory requirements is “key” to fostering an atmosphere conducive to responsible and creative development. She further stated:

“Hong Kong’s comprehensive virtual assets regulatory framework follows the principle of ‘same business, same risks, same rules’ and aims to provide robust investor protection and manage key risks.”

The rules will go into force in June 2023, but no platforms for trading virtual assets with retail investors have been given the SFC’s clearance. The SFC received 152 written contributions from the industry throughout the consultation period, according to the release.

A “number of robust measures” would also be put in place, according to the SFC, to ensure that retail investors are protected. Along with admission standards and disclosure, these include excellent governance, suitability during the onboarding process, and increased token due diligence.

The announcement noted that the SFC does not currently regulate the majority of public access trading platforms for virtual assets. People who don’t want to follow the impending rules should prepare for an “orderly closure” of their business operations in Hong Kong, it stated.

The Hong Kong SFC is scheduled to publish licensing guidelines for cryptocurrency exchanges in the final week of April. On June 1, the new rules will support cryptocurrency trading platforms that provide trading services to regular clients. During the public consultation phase, the regulatory framework for cryptocurrency exchanges got more than 150 responses.

The pilot program for the digital Hong Kong dollar (CBDC) has started, according to an announcement made last week by the Hong Kong Monetary Authority (HKMA). The initiative’s introduction demonstrates how committed the Asian country is to incorporating virtual currencies into its financial system.

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