Hong Kong Issues Proposal for Regulation of Digital Trading Platforms

The Securities and Futures Commission (SFC) of Hong Kong has released a proposal that is expected to guide the trading of digital assets in the region. 

Under the proposed guideline, all crypto trading platforms will be required to get a license from the SFC for them to be able to operate. SFC’s CEO, Ms. Julia Leung stated that the agency’s proposal for regulating exchanges includes strong safeguards for investors’ assets.

Operators of digital trading platforms were instructed to start making plans for obtaining their licenses or to get ready for a peaceful shutdown of their operations if they chose not to. 

The new rules encompass important topics such as the safe custody of assets, know-your-customers, cybersecurity, risk management, anti-money laundering/counter-financing of terrorism, and preventing market misconduct.

The SFC said it would work in collaboration with the Investor and Financial Education Council to enhance investor education for the public. In addition, the agency also plans to post listings on its website detailing the various regulatory standings of digital trading platforms.

Notably, an earlier guideline was established last year for firms interested in launching an Exchange-Traded Fund (ETF) connected to digital assets futures.

Hong Kong to Permit Retail Crypto Trading

Regulators in Hong Kong are planning to authorize retail trading in cryptocurrencies in the region. This is because the city has such a strong focus on becoming digital asset and financial hub.

Hong Kong has now developed a master plan that will examine how retail investors might be given a reasonable level of access to tokens such as Bitcoin and Ethereum. Several international crypto exchanges have made remarkable contributions, which has accelerated the process.

Larger coins could be traded by individual investors on exchanges that hold SFC’s licenses, provided that safe measures including knowledge exams, risk profiles, and acceptable exposure limitations are in place.

The news comes shortly after some Hong Kong-based institutional investors said they intend to lessen their exposure to fluctuations following the market downturn in the industry.