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The Securities and Futures Commission (SFC) of Hong Kong has declared its intention to update its policies concerning virtual currency sales and requirements. This decision has been prompted by the evolving market landscape and inquiries from industry stakeholders.
According to a notice issued on October 20, the SFC revealed that specific virtual currency products will now be exclusively available to professional investors under these revised guidelines. Furthermore, intermediaries engaged in cryptocurrency activities must assess their clients’ knowledge of virtual asset investments before conducting any transactions.
The SFC acknowledged the growing popularity of virtual assets in various parts of the world but emphasized that the global regulatory environment remains inconsistent. The risks linked to virtual asset investments, as identified by the SFC back in 2018, are still pertinent.
The updated requirements categorize virtual assets as “complex products” within the purview of the SFC, making them subject to the same regulations as other similar financial products. The guidelines explicitly mention cryptocurrency exchange-traded funds and products issued from outside Hong Kong as examples of complex products.
This development follows the aftermath of the JPEX crypto exchange scandal, which deeply impacted many cryptocurrency users in Hong Kong. In September, the SFC reported over 1,000 complaints related to JPEX, with users collectively reporting significant losses. Subsequently, the local police arrested six JPEX employees for operating an unlicensed cryptocurrency exchange.
While it remains unclear whether the updated policies are a direct response to the JPEX situation, the regulator had previously expressed its intent to enhance efforts to keep cryptocurrency investors informed about potential risks. In October, the Hong Kong Police Force and SFC established a joint working group with the objective of monitoring and investigating any illicit activities associated with digital assets.
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