Hong Kong's Securities and Futures Commission (SFC) plans to restrict retail investors' access to virtual assets when the new licensing regime comes into effect in June.
According to local sources, The SFC is planning to issue a consultation paper in the current quarter outlining the products and conditions for retail investors to trade in virtual assets, as well as licensing requirements for virtual assets trading platforms.
The new CEO of the SFC, Julia Leung Fung-yee, stated that only those with "deep liquidity" will be on the list of allowed virtual assets for retail trading.
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Fung-yee added:
"Some virtual assets platforms have over 2,000 products, but we do not plan to allow retail investors to trade in all of them.”
Hong Kong's Legislative Council passed the amended Anti-Money Laundering and Counter-Terrorist Financing Act last month, which will impose new licensing rules on virtual asset service providers.
These platforms will have to apply for a license from the SFC to operate, or they will be shut down within nine months after the law comes into effect.
Leung said that the new regulations will require virtual-asset trading platforms to have internal controls, risk management, and proper custodian arrangements to safeguard clients’ assets, as well as take measures to prevent cybersecurity risks.
The inclusion of virtual assets for retail trading represents an opportunity for financial services firms to widen their reach beyond professional investors or those with at least $1.02 million in bankable assets.
At the time of writing, the SFC only allows professional investors to trade in virtual assets as part of a trial that started in 2019.
In other crypto regulation news, the Thai SEC is planning to strengthen crypto regulation.
