Regulators remain diligent about their goals for the cryptocurrency industry. as part of its objective To become a hub for digital currenciesThe Hong Kong Securities and Futures Commission earlier today unveiled a proposal to allow retail investors in Hong Kong to trade larger crypto assets such as Bitcoin (BTC) and Ethereum (BTC) but only those that are authorized.
It was revealed in Consultation paper Posted on Monday about the newly proposed licensing scheme for cryptocurrency exchanges that is set to be implemented from June 2023.
Retail investors to trade in licensed crypto assets
According to the SFC in a consultation paper published earlier today, individual retail investors will be allowed to trade larger crypto assets listed on crypto exchanges licensed by the Securities and Futures Commission.
Although the regulator did not disclose which crypto assets would be allowed for crypto assets, a spokesperson for the SFC noted that Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, stand the greatest chance of being available to retail investors on Hong Kong-licensed platforms. .
Over the past months since revealing its goal to be the home of cryptocurrencies, the Hong Kong regulator has since focused on protecting investors towards the cryptocurrency market. Last month, the SFC announced Limit retail investors to highly liquid assets only.
Only licensed crypto exchanges will serve retail investors
The advisory paper not only reflected on licensed crypto assets, but also cryptocurrency exchanges. The SFC suggested in the paper that only cryptocurrency exchanges authorized by its regulator should be allowed to serve investors and that guidelines should be put in place to provide a range of “strong investor protection measures.”
Notably, most of the SFC’s measures focused on the crypto industry are derived from current guidance from some financial sectors in the region. “Our proposed requirements for virtual asset trading platforms include strong measures to protect investors, following the principle of ‘same business, same risk, same rules,’” CEO Julia Leung said in a statement.
Emphasizing the need for cryptocurrency exchanges to be licensed before operating in Hong Kong, the regulator outlined in the announcement a list of concessions for cryptocurrency exchanges and service providers willing to set up in Hong Kong.
This included ensuring safe keeping of assets, providing Know Your Customer (KYC) details, conflicts of interest, cyber security, accounting and auditing, risk management, AML/CFT, and preventing market irregularities.
Businesses aiming for continuous operation and applying for a license are urged to review and revise existing regulations and guidelines to meet the requirements of the upcoming system. Cryptocurrency exchanges and service providers that do not adhere to the privileges listed or apply for a license are said to have been shut down.
More generally, the SFC has indicated that it will organize a list of licensed crypto exchanges and service providers to enlighten the general public about the registration statuses of various crypto companies in Hong Kong. According to the SFC, only two trading platforms have been licensed under the SFC so far.
Furthermore, the paper also revealed comments from the public that stated that dissenting retail investors’ access to an unfiltered crypto market may do more harm than good in the sense that individuals may be tempted to trade on an unregulated foreign platform accessible online.
Meanwhile, the cryptocurrency market is still in an uptrend despite the regulator’s opinion on the industry emerging. Bitcoin is up 14.4% in the past seven days while Ethereum is up 13.3% over the same period.
The global market cap of cryptocurrencies is still holding above the $1 trillion mark and is currently hovering above $1.188 trillion, up 1.5% in the past 24 hours.
Featured image from PYMNTS, chart from TradingView