The Hong Kong Securities and Futures Commission (SFC) announced it would soon allow licensed platforms to serve retail investors.
In a May 23 announcement from the SFC, the regulator said operators of virtual asset trading platforms willing to comply with the SFC’s proposed guidelines are welcome to apply for a license.
The guidelines for virtual asset trading platforms will include asset custody safety requirements, cybersecurity standards and the segregation of client assets — among others.
The SFC CEO Julia Leung said that providing clear regulator expectations is “key” to creating a responsible and innovative development environment.
“Hong Kong’s comprehensive virtual assets regulatory framework follows the principle of ‘same business, same risks, same rules’ and aims to provide robust investor protection and manage key risks.”
While the guidelines will become effective in June 2023, the SFC has yet to approve any virtual asset trading platform to provide services to retail investors. According to the announcement, the SFC received 152 written submissions from within the industry during the consultation period.
Additionally, the SFC said it would implement a “number of robust measures” to ensure protection for retail investors. These include good governance, suitability during the onboarding process, enhanced token due diligence, admission criteria and disclosure.
The announcement highlighted that, at the moment, most of the virtual asset trading platforms accessible to the public are not regulated by the SFC.
It continued to say that those who do not wish to comply with the upcoming guidelines should plan for an “orderly closure” of business operations in Hong Kong.
In an interview with Cointelegraph in early May, Neil Tan, the chair of the FinTech Association of Hong Kong, said the country opening the financial industry to digital assets is “just a natural progression.”
On May 17, the state-owned Chinese company Greenland applied for a virtual asset trading license in Hong Kong.