HK to allow crypto trading in licensed exchanges starting from June 1
Published: May 23, 2023 09:59 PM
A view of Hong Kong Photo: VCG

A view of Hong Kong Photo: VCG

Hong Kong is set to allow retail investors to trade cryptocurrencies on licensed exchanges starting from June 1, according to an announcement by the Securities and Futures Commission (SFC) on Tuesday. This move is part of the city's ongoing efforts to support the development of virtual assets (VAs) while ensuring appropriate safeguards and establishing itself as a crypto financial hub.

SFC on Tuesday released the consultation conclusion on the proposed regulatory requirements for virtual asset trading platform operators, a draft guideline that list requirements on VA trading platform operators issued in February. The consultation ended on March 1.

The guidelines set out, among others, safe custody of assets, segregation of client assets,  conflict of interest avoidance, and cybersecurity standards. In order to protect individual investors, the SFC will implement measures such as suitability assessments during the onboarding process, good governance practices, enhanced due diligence for tokens, admission criteria, and disclosures.

Julia Leung, the SFC’s Chief Executive Officer, was quoted as saying in a statement on SFC’s website that “providing clear regulatory expectations” is the key to fostering responsible development.

“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. This will enable the industry to develop sustainably and support innovation,” Leung said. 

In the statement, SFC stressed that the commission has yet to approve any virtual asset trading platform to provide services to retail investors and most virtual asset trading platforms currently accessible by the public are not regulated by the SFC.

"The VA licensing regime is the first comprehensive regulatory framework in the world to include a full range of investor protection features, which are essential to facilitating responsible and sustainable development of the VA sector," a spokesman for the Financial Services and the Treasury Bureau said in a previous statement sent to the Global Times. 

Wang Peng, a research fellow at the Beijing Academy of Social Sciences, told the Global Times on Tuesday that the implementation of the new guideline reflects an encouraging attitude toward fintech innovation and a balanced approach to supervision and development. 

Industry insiders said that the Hong Kong authorities have been exploring ways of balancing "a healthy dose of supervision" to prevent the crypto market from going astray while "not putting a fence" up against innovations. 

In October, Hong Kong released a policy paper demonstrating its supportive stance on fostering the sustainable development of the local VA sector.