The crypto market, as most people know, can generate quick profits, but it can also cause steep losses in the short term. Entities and companies that try to use this technology know this and because of that, they have to keep consumer protection in mind.
In today’s news, Hong Kong set a plan to prioritize consumer protection by limiting retail investors to trading only “Highly Liquid” Crypto Assets. This information was announced at the Asian Financial Forum on January 11.
Hong Kong To Shortlist Crypto Assets For Retail Investors
According to the CEO of the Securities and Futures Commission (SFC) Julia Leung Fung-yee, the Hong Kong watchdog made it the movement is significant to bring crypto regulation to the region. Part of that is shortlisting crypto assets to allow retail investors to trade only “highly liquid” assets with licensing laws.
In addition, Leung said at the Asian Financial Forum on Wednesday that the SFC will issue a consultation paper this quarter that will provide more details on products and conditions for retail investors to trade virtual assets. In addition, the SFC will release guidelines for licensing requirements for virtual asset exchanges.
Leung further emphasized the limitation of allowing retail investors to trade only certain assets. “Some virtual asset platforms have more than 2,000 products, but we do not plan to allow retail investors to trade all of them. We will set criteria that will allow retail investors [only] trade in major virtual assets,” Leung said.
Leaving exclusive details, Leung did not list the specific crypto assets that will go into the crypto tokens he chooses for retail trading. However, Robert Lui, head of digital assets at Deloitte Hong Kong, hinted that the SFC may choose the 10 or 20 most liquid virtual assets for retail investors to trade.
Hong Kong Keen On Crypto Regulation
Furthermore, as part of the interest in investor protection, the SFC also aims to regulate crypto exchanges stating that the regulation requires exchange platforms to have internal controls, risk management, and proper custodial arrangements to safeguard client assets.
Leung said, “If there is proper regulation, then the possibility of FTX-type collapse will not happen in the future Hong Kong.” In addition to crypto regulation, Leung also announced the SFC’s plans to ensure Hong Kong is a center for green financing.
He stated that the SFC will work with the Hong Kong stock exchange in a separate consultation later this year to identify climate disclosure risks faced by listed companies. While the need for crypto regulation has arisen, the crypto market is still aiming to be global adoption.
The global cryptocurrency market capitalization has made some significant moves over the past few days and currently stands at $845 billion at the time of writing.
Featured image from Unsplash, Chart from TradingView.com