The Asian Financial Forum 2023 opened yesterday. During the Forum, Julia Leung, the newly appointed CEO of the Securities and Futures Commission (SFC), announced that a consultation paper on virtual assets will be issued in this quarter and new licensing rules for virtual assets platforms will be effective in June. The consultation covers the products and conditions for retail investors to trade in virtual assets, and the licensing requirements for virtual assets trading platforms.
“Some virtual assets platforms have over 2,000 products, but we do not plan to allow retail investors to trade in all of them,” “We will set the criteria that would allow retail investors to trade in major virtual assets.” Julia said.
Julia did not identify and provide any examples of virtual assets, but said only “deep liquidity” will be on the list. She also said that only “highly liquid” assets will be allowed for retail trading when someone asked if cryptocurrencies like Bitcoin or Ethereum could be included of virtual assets.
“We aim to have a proper regulatory framework to safeguard the interest of all investors and to enhance Hong Kong as a virtual asset hub,” Julia said.
Hong Kong’s Legislative Council last month passed the amended Anti-Money Laundering and Counter-Terrorist Financing Act, imposing new licensing rules on virtual asset service providers from June this year under the purview of the SFC. Internal controls, risk management and proper custodian arrangements are the requirements to safeguard clients’ asset of the new regulations. The platform providers also have to provide a framework to prevent cybersecurity risks.
Julia also stated that a proper regulation can prevent another financial disaster likelihood of an FTX-type collapse.