Hong Kong will allow licensed cryptocurrency trading platforms to offer services to retail investors and will implement a slew of measures to protect individual traders, the Securities and Futures Commission (SFC) said on Tuesday.

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Fast facts

  • The securities regulator said in a statement that it will implement several measures to protect retail investors, including ensuring suitability in the onboarding process, good governance, enhanced token due diligence, admission criteria and disclosures.
  • Hong Kong’s new rules for the cryptocurrency industry will come into effect from June 1 as the city aims to become a global hub for digital assets.
  • The SFC said it has yet to approve any virtual asset trading platform to provide services to retail investors and that most trading platforms currently operating in Hong Kong are not regulated.
  • Under the new rules, virtual asset trading platforms must apply for a license to operate in Hong Kong. The securities watchdog will begin accepting applications from June 1, when the regime commences.
  • In the Tuesday statement, Hong Kong released the conclusions of a consultation on proposed regulatory requirements for virtual asset trading platform operators. In February, the city sought public feedback on its new proposals to regulate the industry. 
  • During the consultation period which ended on March 31, the SFC said it received 152 written submissions from industry and professional associations, professional and consultancy firms, market participants, licensed corporations, individuals and other stakeholders. 
  • Hong Kong’s desire to allow retail crypto trading contrasts with its traditional rival Singapore, which said it does not encourage speculative crypto trading, especially for retail investors. Neighboring Thailand has banned crypto lending and staking services, while India imposes one of the harshest taxation regimes to discourage retail investors from crypto trading.
  • “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,” Julia Leung, the SFC’s chief executive, said in the statement.

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