Hong Kong Regulators Restrict Retail Investor to Access Crypto Products

Hong Kong modifies cryptocurrency legislation to protect individual investors in the face of changing market and worldwide inconsistencies, highlighting the position of complicated products.
Hong Kong Regulators Restrict Retail Investor to Access Crypto Products

Central bank in Hong Kong have made changes to their crypto policy following inquiries from the crypto industry. Authorities have published new guidelines in a document governing the activity of middlemen in the virtual asset market.

These regulations contain additional safeguards for normal investors, such as limiting their capacity to participate in what the authorities deem to be complex cryptocurrency goods.

Five years ago, Hong Kong began regulating cryptocurrency assets by restricting most market operations to professional investors. However, the number of financial products based on virtual assets has increased since then, and regulators have allowed crypto trading platforms to serve regular, everyday investors.

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have issued a joint circular to update their policies in this area, in response to the changing market and growing interest from industry players who want to offer virtual asset products and services to the general public.

“As these risks are not reasonably likely to be understood by a retail investor, VA-related products are very likely to be considered complex products,” according to the regulatory bodies.

The authorities have stressed that the issues they raised in 2018 remain valid today due to inconsistencies in cryptocurrency rules and regulations around the world.

According to the SFC and the HKMA, procedures must be put in place to protect investors who work with virtual assets. These steps should go beyond Hong Kong’s current rules for complex financial products.

They cited examples from other nations, such as cryptocurrency exchange-traded funds (ETFs) and exchange-traded products (ETPs), to demonstrate the importance of these safeguards.

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