The Securities and Futures Commission (SFC) in Hong Kong has announced its intention to allow licensed platforms to offer services to retail investors. In a recent announcement on May 23, the SFC stated that virtual asset trading platform operators willing to comply with the SFC's proposed guidelines can apply for a license.
The guidelines for virtual asset trading platforms will encompass various aspects, including requirements for asset custody safety, segregation of client assets, cybersecurity standards, and more.
SFC CEO Julia Leung emphasized the importance of providing clear regulatory expectations, stating that it is crucial for creating a responsible and innovative development environment. The comprehensive virtual assets regulatory framework in Hong Kong follows the principle of "same business, same risks, same rules" and aims to ensure robust investor protection and manage key risks.
While the guidelines will become effective from June 2023 onwards, the SFC has yet to approve any virtual asset trading platform to serve retail investors. During the consultation period, the SFC received 152 written submissions from industry participants.
The SFC also outlined several measures it will implement to safeguard retail investors, including ensuring good governance, suitability assessments during the onboarding process, enhanced token due diligence, and establishing admission criteria and disclosure requirements.
Currently, most of the virtual asset trading platforms accessible to the public in Hong Kong are unregulated by the SFC. The announcement states that those platforms unwilling to comply with the forthcoming guidelines should plan for an orderly closure of their business operations in Hong Kong.
Neil Tan, the chair of the FinTech Association of Hong Kong, mentioned in an interview with Cointelegraph in early May that the country opening its financial industry to digital assets is a natural progression.
On May 17, the state-owned Chinese company Greenland applied for a virtual asset trading license in Hong Kong, signaling further interest and activity in the space.