Hong Kong’s securities regulator recently disclosed plans to grant retail investors access to virtual assets platforms.
The Hong Kong Securities and Futures Commission (SFC) declared that regulated platforms would soon be able to cater to retail investors.
The SFC said operators of virtual asset trading platforms are invited to apply for a license if they are ready to follow the SFC’s suggested rules in statement on May 23. Among other things, the rules for virtual asset trading platforms will include asset custody security requirements, cybersecurity requirements, and client asset segregation.
According to Julia Leung, CEO of SFC, setting clear regulatory requirements is “key” to creating an environment for responsible and innovative growth.
The comprehensive regulatory framework for virtual assets in Hong Kong is based on the principle of “same business, same risks, same rules” and is intended to protect investors as well as regulate major risks.
The rules will go into effect in June 2023, however, the SFC has not yet authorized any trading platforms for virtual assets to offer services to individual investors. The SFC reportedly received 152 written submissions from the industry throughout the consultation period, per the release.
In order to secure the safety of retail investors, the SFC also said that it would put in place “a number of robust measures.” These include transparency, enhanced token due diligence, enhanced token due diligence, excellent governance, and suitability during the onboarding process.
The announcement made clear that the majority of public trading platforms for virtual assets are not currently under SFC regulation.
It went on to add that individuals who were unwilling to follow the upcoming guidelines ought to prepare for an “orderly closure” of their company operations in Hong Kong. The Hong Kong FinTech Association’s chairman, Neil Tan, stated in an interview that the opening of the country’s financial sector to digital assets is “just a natural progression.”
The state-owned Chinese company Greenland filed a license application to trade virtual goods in Hong Kong on May 17.