Hong Kong's SFC Announces Revised Cryptocurrency Regulations for Investor Protection
Summary:
Hong Kong's Securities and Futures Commission (SFC) plans to update its regulations regarding cryptocurrency transactions due to recent market changes. Under the new guidelines, certain virtual currencies will be accessible only to professional investors. The changes also encourage operators in the crypto space to verify their clients' knowledge of virtual asset investments. The SFC reminds investors that despite the emerging popularity of digital currencies, regulatory landscapes are uneven globally. Complex products, under the new regulations, include crypto exchange-traded funds and products originating outside Hong Kong.
Hong Kong's Securities and Futures Commission (SFC) has revealed plans to revise its regulations on cryptocurrency transactions and stipulations, in order to keep pace with recent market evolution and in response to requests from the sector. The regulatory organization, in its announcement dated October 20, stated that certain cryptocurrencies will only be accessible to expert investors under the revised policies. In addition, it is encouraged that crypto intermediaries assess the knowledge of their clients about virtual asset investments before proceeding with any deals. The SFC noted that despite the growing popularity of digital assets worldwide, there remains a lack of global regulatory consistency. The risks of virtual asset investing that were recognized by SFC in 2018 are still relevant. The modified regulations regard virtual assets as complex products, subject to the same rules as other comparable financial products. Examples quoted were cryptocurrency exchange-traded funds and products originating outside Hong Kong. The upshot of JPEX crypto exchange scandal still shakes the cryptocurrency user community in Hong Kong. In September, SFC received over a thousand complaints related to JPEX, with losses mounting to millions of dollars. Six employees from JPEX were subsequently arrested by the local police for running an unauthorized crypto exchange. Whether or not these updated regulations were a consequence of the JPEX incident is uncertain. However, the regulatory body did make a statement in September about intensifying their efforts to educate cryptocurrency investors about potential risks. In October, a collaboration was established between the Hong Kong Police Force and SFC to monitor and investigate possible unlawful activities related to digital assets.
Published At
10/20/2023 4:24:53 PM
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