Hong Kong’s move to allow retail trading in cryptocurrencies has come after a year of turmoil in the sector, with the collapse of crypto exchange FTX last year a major blow.
Hong Kong’s securities regulator said its crypto licensing regime will include measures to protect retail investors as it brings in tougher rules for digital asset companies from June 1.
Hong Kong’s move to allow retail trading in cryptocurrencies has come after a year of turmoil in the sector, with the collapse of crypto exchange FTX last year a major blow.
The new regime requires all trading platforms and exchanges to apply for a licence, failing which would result in fines and jail terms,
Operators should also perform client checks to ensure that retail traders from China, where crypto trading is banned, will not be accepted, Keith Choi, interim head of intermediaries at the Securities and Futures Commission (SFC) told a press conference on Tuesday.
“Operators have the responsibility to comply with the laws and regulations in the jurisdictions in which it provides services,” he said.
The SFC concluded a February consultation on digital asset trading, which proposes various investor protection measures. A total of 152 submissions were received.
Measures include requiring companies to set an exposure limit for retail investors as well as only allowing retail trading in highly liquid tokens that have been issued for at least one year.
The new system also covers the marketing of services from unlicensed platforms.