Hong Kong's Securities and Futures Commission (SFC) has announced plans to update its framework on cryptocurrency sales and requirements amid changing market development of the digital asset industry.
At the next regulator meeting amendment notice Posted on October 20, five main parts were addressed regarding the crypto industry.
These include the distribution of virtual asset (VA) related products and the provision of cryptocurrency trading services, asset management platforms, advisory services and implementation steps.
The SFC emphasized that while the spread of VA has spread to regions beyond and increased its popularity, the global regulatory landscape remains uneven.
The risks associated with investing in digital assets, such as anti-money laundering (AML) and countering the financing of terrorism (CFT), remain present.
However, the SFC and Hong Kong authorities are prioritizing investor protection due to the growing growth of the cryptocurrency regulatory landscape.
This will be followed by updated strict measures and requirements to curb the risks associated with these assets.
The comprehensive amendment notice stated that restrictions would be placed on the sale of some assets.
For example, complex VA-related products, such as cryptocurrency exchange-traded funds and products outside of Hong Kong, will only be available to professional investors.
Furthermore, brokers linked to the crypto space will evaluate whether investors have substantial knowledge about VA trading before executing any transaction.
Monitoring Hong Kong's latest regulatory landscape
As of press time, there is no specific legislative policy in Hong Kong regulating virtual assets (VAs), and no agency is tasked with examining the evolving landscape of the market.
However, several financial regulators have published guidelines to supervise the industry. These include the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC) and the Insurance Authority (IA).
If a VA has security features as clarified in Cap 571 of the Securities and Futures Ordinance (SFO) of Hong Kong, will be regulated by the SFC and relevant laws.
The latest guideline notice came after a series of complaints from over 2,300 users of the JPEX crypto exchange, involving losses of funds and assets worth millions of dollars.
He CFS revealed that the Dubai-based trading platform had operated without a license to operate with VA.
The investigation revealed that most of the victims were novice investors who were promised massive returns. The fake exchange collaborated with influencers to advertise unregistered products and services.
To prevent a repeat of the JPEX scandal and provide investors with standard protection, the SFC partnered with the Hong Kong Police Force (HKPF) to create a crypto-centric pool for illicit activities.
According to the official advertisement On October 4, the new group will continue to investigate the JPEX scandals and more arrests will follow.
