December 5, 2022

Hong Kong Allows Retail Investors To Invest In Crypto Directly

Hong Kong, which has had a professional-investor requirement for making crypto investments, is finally reversing the policy, which will allow retail investors to trade cryptocurrencies as well.

The licensing director at the country’s Securities and Futures Commission, Elizabeth Wong, recently spoke on crypto regulation.

As part of a panel discussion hosted by Invest HK, she mentions that Hong Kong’s regulatory policies differ from those of mainland China.

She stressed that the country can introduce its own crypto bill to regulate cryptocurrencies, proving how Hong Kong and mainland China are different.

SFC Considers Allowing Retail Investors to Invest In Crypto

The head of the SFC’s fintech unit confirmed that the agency is in the works to permit retail investors to invest in cryptocurrencies directly.

In the last four years, the SFC has only allowed professional investors to trade cryptocurrencies. Based on this policy, individuals with a minimum of HK$8 million in liquid assets count as professional investors.

Touching upon how the crypto industry has raised compliance, the licensing director expressed that it’s a good time to consider allowing retail investors to trade crypto.

Currently, the Hong Kong government is increasing its efforts to bring back fintech companies that left due to harsh restrictions.

SFC Introduces Regulatory Framework Requiring Exchanges to Register

In 2019, the SFC set up regulatory guidelines for crypto exchanges and trading platforms. It requires centralized exchanges providing crypto trading services for at least one security token to apply for an SFC license.

At the time, the regulator clarified that the licensee should only offer services to professional investors.

The agency then issued the first SFC license to a crypto trading platform in December 2020. Currently, OSL Digital Securities Ltd. is the sole licensee named on the SFC website.

SFC Looking Into Allowing Retail Investors to Invest in ETFs

Wong also explained that the SFC is will also relax restrictions on retail investors, allowing them to invest in digital assets over the last year.

Moreover, it’s reviewing guidelines on permitting investors to access crypto exchange-traded funds. But before the SFC makes amendments to regulations, the agency will ask for the public’s comments later this year on whether they should allow retail investors to access cryptocurrencies directly.

Wong also added that Hong Kong is set to announce a mandatory licensing permit for cryptocurrency exchanges. These major developments look like Hong Kong is looking to regain its crypto hub status.

Moreover, it is part of an underlying strategy to distinguish itself from mainland china, where there has been a strict ban on cryptocurrencies. This comes after the city launched a $3.8 billion fund to lure in foreign businesses after many professionals left due to rigorous lockdowns and an uncertain political climate.