Hong Kong regulator to issue cryptocurrency licenses with safeguards for retail investors

Hong Kong’s securities regulator said its crypto licensing regime will include measures to protect retail investors as it introduced tougher rules for digital asset firms from June 1.

Hong Kong’s move to allow retail cryptocurrency trading comes after a year of turmoil in the industry, with the collapse of cryptocurrency exchange FTX last year being a blow.

The new regime requires all exchanges and exchanges to apply for a license, or face fines and jail time,

Operators should also check with customers to ensure that retail traders from China, where crypto trading is banned, will not be accepted, said Keith Choi, acting head of intermediaries at the Securities and Futures Commission. (SFC), during a press conference on Tuesday.

“Operators are responsible for complying with the laws and regulations of the jurisdictions in which they provide services,” he said.

The SFC completed a consultation on digital asset trading in February, which proposes various measures to protect investors. A total of 152 proposals were received.

The measures include requiring companies to set an exposure limit for retail investors, as well as allowing retail trading only in highly liquid jets that have been issued for at least a year.

The new system also covers the marketing of services from unlicensed platforms.

“It is an offense to issue an advertisement related to an unlicensed platform, this would cover (social media influencers) personally promoting (these platforms’) services to Hong Kong investors,” said Elizabeth Wong, head of the fintech unit of the SFC.

On Monday, the International Organization of Securities Commissions (IOSCO) unveiled the world’s first approach to regulating crypto-assets, as the collapse of the FTX exchange last year fueled fears consumers may not be off the hook. .

Still, some investors are undeterred, as bitcoin has since recovered 75% to hit $27,431 on Tuesday. It has been hovering above $26,000 since the banking turmoil that rocked the United States and Europe in March.

The SFC will begin accepting applications from June 1. (Reporting by Georgina Lee, editing by Louise Heavens)