Hong Kong’s Securities and Futures Commission (SFC) has announced it will update its policy on digital asset trading, restricting access to certain crypto products to investors with no experience.
Hong Kong’s Securities and Futures Commission has updated regulatory requirements for local cryptocurrency companies, requiring them to assess customer experience as part of digital asset transactions.
SFC analysts categorized a number of digital assets as “complex products.” Namely, virtual asset exchange-traded funds (ETF), a range of exchange-traded products (ETPs), and derivatives. The regulator considers that retail investors can’t assess all the risks associated with this asset class on their own. The SFC is therefore introducing the following additional investor protections for the distribution of digital asset products:
- Restricting access to “complex products.” Certain crypto products will only be available to professional investors.
- Evaluating investor experience. Crypto service providers will be obliged to assess whether their clients are experienced in investing in digital assets before making transactions and to warn them of possible risks.
The SFC initiative is directly related to the activities of the crypto exchange JPEX. In September, the regulator gave a warning to the company, accusing it of operating in the region without a proper license. After local law enforcement agencies started receiving complaints from JPEX users in Hong Kong, the company was accused of organizing a fraudulent scheme that led to the loss of $166 million worth of cryptocurrencies.
The Hong Kong Police Force recently launched the CyberDefender Metaverse to inform citizens about threats and opportunities related to the Web3 space and digital assets.
