Hong Kong To Allow Retail Investors Trade Larger Licensed Crypto Asse


Regulators are still keen on their respective aims towards the cryptocurrency industry. As a part of its goal of becoming a crypto hub, Hong Kong’s Securities and Futures Commission earlier today revealed a proposal to allow retail investors in Hong Kong to trade larger crypto assets such as Bitcoin (BTC) and Ethereum (BTC) but only those that are licensed. 

The order was disclosed in a consultation paper published on Monday about its newly proposed licensing regime for cryptocurrency exchanges set to be put in place from June 2023. 

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Retails Investors To Trade Licensed Crypto Assets

According to the SFC in the consultation paper published earlier today, individual retail investors would be allowed to trade larger crypto assets listed on crypto exchanges licensed by the Securities and Futures Commission. 

Though the regulator did not reveal which crypto assets will be allowed for crypto assets, an SFC spokesperson noted, Bitcoin and Ethereum which are the largest cryptocurrency by market cap have the highest chance to be available to retail investors on licensed Hong Kong platforms. 

Over the past months since the disclosure of its goal to be home to cryptocurrency, the Hong Kong regulator has since focused on investor protection towards the crypto market. Last month, the SFC announced the limitation of retail investors to only highly liquid assets

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Only Licensed Crypto Exchanges Will Serve Retail Investors

The consultation paper did not only reflect on licensed crypto assets but also on crypto exchanges. The SFC proposed in the paper that only crypto exchanges licensed by its regulatory body should be allowed to serve investors as well as what guidelines should be put in place to provide a range of “robust investor protection measures.“

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Notably, most of the SFC’s measures focused on the crypto industry are drawn from existing guidelines from some of the region’s financial sectors. CEO Julia Leung said in a statement, “Our proposed requirements for virtual asset trading platforms include robust measures to protect investors, following the ‘same business, same risks, same rules’ principle.”

Emphasizing the need for crypto exchanges to be licensed before operation in Hong Kong, the regulator outlined in the announcement a list of perks for existing as well as crypto exchanges and service providers wanting to establish in Hong Kong. 

It included ensuring safe custody of assets, providing Know Your Customer (KYC) details, conflicts of interest, cybersecurity, accounting and auditing, risk management, Anti-Money Laundering/counter-financing of terrorism, and prevention of market wrongdoings.

Businesses with the aims of continuous operation and applying for a license are urged to review and revise the existing systems and guidelines to meet the requirements of the upcoming regime. Crypto exchanges and service providers that fail to adhere to the listed perks or apply for a license are said to be shut down. 

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Overall, the SFC noted it will curate a list of licensed crypto exchanges and service providers so as to enlighten the general public about the registration statuses of different crypto companies in Hong Kong. According to the SFC, only two trading platforms are licensed under the SFC as of now.

Furthermore, the paper further revealed feedback from the public which stated that the opposing retail investors’ access to an unfiltered crypto market may do more harm than good in the sense that, individuals may be tempted to trade on an unregulated foreign platform accessible online. 

Meanwhile, the crypto market is still in an uptrend despite the popping up of regulator say on the industry. Bitcoin is up 14.4% in the last 7 days while Ethereum is up 13.3 over the same period. 

Bitcoin is moving sideways on the 1-day chart. Source: BTC/USDT on TradingView.com

The global cryptocurrency market capitalization still sits steadily above the $1 trillion mark and currently ranges above $1.188 trillion up by 1.5% in the last 24 hours. 

Featured image from PYMNTS, Chart from TradingView

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Author: Samuel Edyme

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