Hong Kong allows investors to trade cryptocurrencies

This shows that Hong Kong is trying to restore its position as a global financial center. According to SCMP , the new regulations will allow licensed cryptocurrency exchanges to sell to investors cryptocurrencies with large market capitalizations such as Bitcoin or Ethereum.

From June this year, it will be a criminal offence to advertise unlicensed cryptocurrency exchanges. Those who use deceptive means to entice others to buy virtual assets will also be breaking the law, the SFC added.

According to Bloomberg, the SFC stressed that licensed exchanges should comply with a series of investor protection measures, including token introduction, governance, and due diligence, before providing services to investors.

Alongside plans to expand trading rights, Hong Kong officials have also pledged to have enough safeguards in place to avoid the kind of crises the cryptocurrency industry saw last year, such as the collapse of exchange FTX.

Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority (HKMA), said at the Bloomberg Wealth Asia Summit that regulations would be stricter. Hong Kong would let the industry develop to create an ecosystem, but that does not mean regulations would be lax, Yue added.

Most of the exchanges that Hong Kong residents can access are not regulated by the SFC.

The SFC announced that licensed exchanges in Hong Kong will have to meet requirements including safe custody of assets, segregation of client assets, avoidance of conflicts of interest and cybersecurity standards.

Exchanges are expected to conduct a comprehensive assessment of investors’ understanding of the nature and risks of digital assets and their risk tolerance, and establish exposure limits. Licensed platforms are also required to establish an assessment and acceptance committee to manage the tokens they offer.

After the market crash in 2022 that led to a series of bankruptcies, governments around the world have become wary of digital assets. Regulators around the world are struggling to monitor the industry. In contrast, regions like Hong Kong and Dubai are trying to attract crypto-related investment.

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