The Securities and Futures Commission (SFC) in Hong Kong announced today that it will soon allow licensed crypto platforms to serve retail investors. The SFC said that operators of virtual asset trading platforms who are willing to comply with its proposed guidelines are welcome to apply for a license.
The guidelines to be followed for virtual asset trading platforms will include aspects such as asset custody safety requirements, segregation of client assets, and cybersecurity standards.
While the guidelines will become effective as of June 2023, the SFC has yet to approve any virtual asset trading platform to provide services to retail investors. According to the announcement, the SFC received 152 written submissions from within the industry during the consultation period.
In addition to the guidelines, the SFC said it will be implementing a “number of robust measures” to ensure protection for retail investors. These include good governance, suitability during the onboarding process, enhanced token due diligence, along with admission criteria and disclosure.
The SFC’s decision to allow retail investors to trade crypto on licensed platforms is a positive step for the Hong Kong crypto industry. It will allow more people to participate in the market and will help to legitimize the industry.
However, it is important to note that the SFC is taking a cautious approach to regulating the crypto industry. The guidelines and measures that the SFC is implementing are designed to protect retail investors from the risks associated with crypto trading.