Hong Kong’s Securities Futures Commission (SFC) is set to release new framework, aka guidelines on the licensing regime for crypto exchanges by next month, according to CEO Julia Leung. The city will unveil its new cryptocurrency framework in May, marking a significant shift in Hong Kong’s approach to the digital asset space.
In February, the SFC published a consultation paper on its proposed regulatory regime for crypto trading platforms, which has received over 150 responses. As part of the new licensing regime for crypto platforms set to come into effect in June, the SFC will allow retail investors to trade certain digital currencies.
A green light for retail investors to trade large-cap tokens
SFC has specifically outlined that retail investors will be able to trade certain “large-cap tokens” on licensed exchanges, provided safeguards such as knowledge tests, risk profiles, and reasonable limits on exposure are put in place. However, the SFC has not specified which large-cap tokens will be allowed, leaving investors to speculate on whether Bitcoin and Ethereum will be included.
This is apparently a change in the SFC’s approach to crypto regulation, as it previously introduced a framework in 2018 that banned retail investors from trading crypto. The regulator acknowledged that the “virtual asset landscape has changed significantly” since it first announced the regulatory regime.
With that, Hong Kong’s new cryptocurrency framework will provide greater clarity and transparency for investors and businesses operating in the digital asset space. It is expected to pave the way for greater adoption of cryptocurrencies in the region, as well as attract more investment into Hong Kong’s blockchain and fintech industries.
As the industry continues to evolve and mature, clear and transparent regulations are essential for protecting investors and ensuring the long-term growth and stability of the sector.