Hong Kong to let individuals trade cryptocurrency
The Hong Kong Securities and Futures Commission (SFC) has revealed plans to permit licensed cryptocurrency platforms to cater to retail investor sunder its new regulatory framework for the sector.
In a statement released today, the SFC invited operators of virtual asset trading platforms to apply for a license if they are willing to adhere to the proposed guidelines. These guidelines will encompass various aspects such as asset custody safety requirements, cybersecurity standards, and the segregation of client assets, among others.
The city-state recently concluded a consultation on retail participation and confirmed its plan to enable individual investors to buy and sell major tokens such as Bitcoin and Ether. This will be implemented from June 1, coinciding with the launch of a new licensing regime for virtual asset platforms.
Nevertheless, the SFC will keep retail traders prohibited from trading stablecoins until new regulatory arrangements are put in place for these assets. The decision comes after the SFC concluded its consultation paper on regulating crypto activities, where it highlighted the need to focus on the risks associated with stablecoins and their regulation.
The regulator said it wants to ensure that stablecoin reserves are appropriately managed to maintain price stability and safeguard investors’ ability to exercise redemption rights. It emphasizes that if these risks are not effectively managed, they could have significant implications for the stability of a stablecoin.
Eddie Yue, CEO of the Hong Kong Monetary Authority (HKMA), cautioned this month that cryptocurrency companies relocating to the city-state should be prepared to face strict regulations as part of a newly implemented regulatory regime.
Yue emphasized the importance of having robust regulatory frameworks, particularly in light of the rapid growth of the cryptocurrency industry. As such, the HKMA is committed to working closely with regulatory bodies and industry stakeholders to develop effective regulations that will protect investors, prevent financial crimes, and promote sustainable growth in the sector.
“Our regulations will be tight. We will let them create the ecosystem here and that actually brings a lot of excitement. But that doesn’t mean light-touch regulation,” said Yue.
The move towards more crypto-friendly regulation is part of Hong Kong’s efforts to restore its position as a leading financial center following the pandemic and political unrest in the territory. Although there has been no change in China’s official stance on cryptocurrencies, which remain heavily restricted on the mainland, there are indications that Hong Kong’s push to become a major hub for digital assets has the support of Beijing.
