In a recent announcement, the Securities and Futures Commission (SFC) of Hong Kong revealed its plans to revise regulations related to virtual currency sales, citing the need to adapt to the latest market developments and industry inquiries.
New Guidelines for Virtual Currency Products
According to the SFC’s notice issued on October 20, specific virtual currency products will now be accessible exclusively to professional investors. Intermediaries within the crypto sphere are required to assess their clients’ knowledge of investing in virtual assets before engaging in any transactions.
Addressing the global scenario, the SFC emphasized the non-uniform regulatory landscape surrounding virtual assets worldwide. Despite the increasing popularity of virtual assets in certain regions, the risks associated with investing in them, as identified by the SFC in 2018, remain applicable.
Under the updated regulations, virtual assets are deemed “complex products” by the SFC. Consequently, they are subjected to the same guidelines as other comparable financial products. Notably, the commission singled out crypto exchange-traded funds and products originating outside Hong Kong as examples of complex products falling under these regulations.
Impact on Hong Kong’s Crypto Community
The Hong Kong crypto community, still recovering from the JPEX exchange scandal, awaits the implications of these regulatory changes. Previously, the SFC disclosed receiving over 1,000 complaints related to JPEX, with users reporting significant financial losses. In response, the local authorities apprehended six JPEX employees for operating an unlicensed crypto exchange.
While it remains unclear whether these updated policies are a direct response to the JPEX incident, the SFC had previously expressed its commitment to informing crypto investors about associated risks. In alignment with this objective, the Hong Kong Police Force and SFC established a collaborative working group in October. This partnership aims to monitor and investigate potential illegal activities involving digital assets, signaling the local authorities’ intensified efforts in ensuring investor protection in the crypto space.