Hong Kong’s Securities and Futures Commission Enhances Investor Protection Measures for Virtual Assets
Hong Kong’s Securities and Futures Commission (SFC) has made updates to its regulatory framework, introducing two additional measures to protect investors involved in virtual asset-related products.
The first measure focuses on selling restrictions. The SFC specifies that virtual asset-related products classified as complex should only be offered to professional investors.
The second measure requires intermediaries to evaluate their clients’ knowledge of investing in virtual assets or virtual asset products. This assessment, known as the “virtual asset-knowledge test,” must be successfully completed before any transactions can proceed. However, if the client lacks the necessary knowledge, intermediaries may still execute a transaction after providing sufficient training. Institutional professional investors and qualified corporate professional investors are exempt from this test.
SFC Addresses Market Developments and Industry Inquiries
The SFC and the Hong Kong Monetary Authority (HKMA) have reviewed their existing policies for intermediaries engaged in virtual asset-related activities. These updates are a response to the latest market developments and industry requests to expand retail access through intermediaries while ensuring appropriate safeguards for investors.
For more information, you can refer to the full announcement by the SFC.
Hot Take: Hong Kong Implements Stricter Measures for Virtual Asset Investors
Hong Kong’s Securities and Futures Commission has taken steps to enhance investor protection in the virtual asset market. With the introduction of selling restrictions and a knowledge assessment test, the SFC aims to ensure that only professional investors have access to complex virtual asset products. This move reflects the SFC’s commitment to aligning its regulatory framework with market developments and addressing industry concerns. By imposing these measures, Hong Kong seeks to strike a balance between expanding retail access through intermediaries and maintaining appropriate safeguards for investors.
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