Hong Kong regulator mulls over allowing retail traders to access crypto
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The Hong Kong Securities and Futures Commission (SFC) has announced it will have a public consultation on the regulatory framework for the digital asset industry. The SFC has said that the interested parties wanting to participate in the discussion must submit their comments by March 31, 2023.
Hong Kong wants to allow retail traders access crypto
The crypto regulatory framework in Hong Kong has changed significantly in recent years. The regulator is now requiring all centralized digital asset trading platforms that offer their services in Hong Kong or targeting Hong Kong investors to obtain a license from the SFC. These businesses must comply with this new regulatory regime from June 1, 2023.
The regulatory regime that the SFC has also proposed for virtual asset trading platforms is similar to the current securities and Futures Ordinance regulatory framework. It is also the same regulatory framework used by licensed securities brokerage platforms and automated trading platforms.
The SFC has also proposed implementing changes to some existing regulatory requirements. These changes will be adopted as part of this initiative to ensure the city transforms into a digital asset hub.
Hong Kong has been trying to transform the city into a digital asset hub, and one of the ways to do this is to develop a friendly crypto regulatory framework that will attract firms operating in the industry. The reports about Hong Kong planning to legalize crypto trading and emerging as a financial hub for the crypto industry started in October 2022.
The regulatory approach taken by Hong Kong is different from the one taken by China. China banned cryptocurrency activities in 2021. While Hong Kong is a special administrative region, it also carries an independent status, which makes it capable of allowing brokers and other platforms to apply for local licenses.
During the consultation phase, the SFC is urging the interested participants to provide their opinion over whether licensed digital asset platforms should be allowed to offer their services to retail traders and the additional measures that need to be taken to protect these traders.
The Chief Executive Officer at the SFC, Julia Leung, commented on the development saying, “As has been our philosophy since 2018, our proposed requirements for virtual asset trading platforms include robust measures to protect investors following the ‘same business, same risks, same rules’ principle.”
Financial companies plan to offer crypto services in Hong Kong
The friendly regulatory regime in Hong Kong is already attracting the interest of some of the leading players in the financial services sector. A week before the announcement by the SFC, Interactive Brokers announced that it would expand crypto services in Hong Kong.
This offering would only be limited to Bitcoin and Ethereum, with Interactive Brokers saying it would only offer the service to professional traders. DBS Group Holdings, one of the largest banks in Singapore, is also interested in offering crypto services in Hong Kong.
