Regulators are still very interested in their intentions towards the cryptocurrency industry. As part of its goal becoming a crypto hubThe Hong Kong Securities and Futures Commission earlier announced a proposal to allow retail investors in Hong Kong to trade larger crypto assets such as Bitcoin (BTC) and Ethereum (BTC) but only those licensed.
The sequence is expressed in a consultation paper published on Monday about the newly proposed licensing regime for cryptocurrency exchanges that will be implemented from June 2023.
Retail Investors To Trade Licensed Crypto Assets
According to the SFC in a consultation paper published earlier today, individual retail investors will be allowed to trade larger crypto assets listed on crypto exchanges licensed by the Securities and Futures Commission.
Although the regulator did not announce which crypto assets will be allowed for crypto assets, the SFC spokesperson noted, Bitcoin and Ethereum which are the largest cryptocurrencies by market cap have the highest chance of being available to retail investors on licensed Hong Kong platforms.
Over the past month since the disclosure of its intention to become a home for cryptocurrencies, Hong Kong regulators have begun to focus on the protection of investors to the crypto market. Last month, the SFC announced Retail investors are limited to highly liquid assets.
Only licensed Crypto Exchanges will serve Retail Investors
The consultation paper not only describes licensed crypto assets but also on crypto exchanges. The SFC proposed in the paper that only crypto exchanges licensed by regulatory bodies should be allowed to serve investors as well as what guidelines should be followed to provide some “strong investor protection measures.”
In particular, most of the SFC’s measures focused on the crypto industry are taken from existing guidelines from several financial sectors in the region. CEO Julia Leung said in a statement, “The proposed requirements for virtual asset trading platforms include strong measures to protect investors, according to the principle of ‘same business, same risk, same rules’.”
Emphasizing the need for crypto exchanges to be licensed before operating in Hong Kong, the regulator stated in an announcement a list of allowances for crypto exchanges and service providers located in Hong Kong.
These include ensuring safe custody of assets, providing Know Your Customer (KYC) details, conflict of interest, cyber security, accounting and auditing, risk management, Anti-Money Laundering/counter-financing terrorism, and preventing market errors.
Businesses with the aim of continuing operations and applying for licenses are encouraged to review and revise existing systems and guidelines to meet the requirements of the upcoming regime. Crypto exchanges and service providers that fail to comply with the listed allowances or apply for a license will be closed.
Overall, the SFC noted that it will regulate the list of licensed crypto exchanges and service providers in order to enlighten the general public about the registration status of different crypto companies in Hong Kong. According to the SFC, only two trading platforms are licensed under the SFC at present.
Furthermore, the paper further expresses the feedback from the public which states that the access of retail investors opposed to the unfiltered crypto market may do more harm than good in the sense that, individuals may be tempted to trade on unregulated foreign platforms accessed online.
Meanwhile, the crypto market is still in an uptrend even though there are regulators talking about the industry. Bitcoin is up 14.4% over the last 7 days while Ethereum is up 13.3 over the same period.
The global cryptocurrency market capitalization still remains above the $1 trillion mark and is currently above $1.188 trillion up 1.5% in the last 24 hours.
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