Hong Kong Authorities Update Guidelines for Virtual Asset Activities
The Securities and Futures Commission (SFC) of Hong Kong has released updated guidelines for virtual asset-related activities. These new guidelines will replace the previous joint circular issued in January 2022. The decision to update the guidelines was prompted by an increasing number of inquiries from intermediaries regarding the distribution of virtual assets.
Expanding Retail Access to Virtual Assets
In 2018, the SFC introduced a regulatory framework for virtual assets, limiting certain activities to professional investors only. However, with the emergence of a wider range of investment products catering to both retail and professional investors, the SFC has extended permission for SFC-licensed virtual asset trading platforms to serve retail investors. Public offerings of virtual asset futures exchange-traded funds in Hong Kong have also been authorized.
Classifying Virtual Assets as “Complex Products”
After reviewing recent market developments and inquiries, the SFC and the Hong Kong Monetary Authority (HKMA) have made policy updates to expand retail access through intermediaries. The updated requirements classify virtual assets as “complex products,” subjecting them to the same guidelines as similar financial products. However, the risks associated with investing in virtual assets since 2018 will still apply.
Hong Kong’s Virtual Asset Regulation Criticized
A week prior to the guideline update, Wang Yang, Vice-President of The Hong Kong University of Science and Technology, criticized Hong Kong’s current virtual asset regulation, labeling it “Licensed to Be Killed.” Despite these criticisms, Hong Kong remains committed to establishing itself as a prominent crypto hub.
Hot Take: Hong Kong Enhances Regulations for Virtual Assets
Hong Kong authorities are taking steps to enhance regulations for virtual assets. The Securities and Futures Commission has issued updated guidelines to replace the previous circular, expanding retail access and authorizing public offerings of virtual asset futures exchange-traded funds. These guidelines classify virtual assets as “complex products,” subject to the same regulations as other financial products. Despite criticism of Hong Kong’s virtual asset regulation, the city continues to position itself as a leading crypto hub.
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