Hong Kong to Limit Crypto Trading Risk for Retail Investors

• Hong Kong is setting a plan to prioritize consumer protection by limiting retail investors to trade only “Highly Liquid” Crypto Assets.
• The Securities and Futures Commission (SFC) will issue a consultation paper later this quarter that will give more details on products and conditions for retail investors to trade in virtual assets.
• The SFC will also release guidelines for the licensing requirements for virtual assets exchanges.

The Hong Kong government is taking steps to ensure consumer protection in the cryptocurrency market. As the volatile nature of digital assets can lead to both large profits and losses in a short period of time, the Securities and Futures Commission (SFC) is putting in place measures to limit retail investors from trading risky assets.

At the Asia Financial Forum on Wednesday, SFC CEO Julia Leung Fung-yee revealed that the regulator is planning to shortlist certain crypto assets for retail investors to trade. This will limit investors to trading only “highly liquid” assets. The SFC will also issue a consultation paper later this quarter which will provide more details on products and conditions for retail investors to trade in virtual assets. Additionally, the regulator will release guidelines for the licensing requirements for virtual assets exchanges.

Leung further emphasized that retail investors will only be allowed to trade major virtual assets. She commented: “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 [only] trade in major virtual assets.”

The actions taken by the SFC reflect the Hong Kong government’s commitment to consumer protection in the crypto market. The regulator is taking steps to ensure that retail investors are not exposed to risky assets and that they have access to the necessary information for them to make informed decisions. This will also help foster a more mature and regulated crypto market, encouraging more entities and companies to adopt the technology.