The SFC has confirmed that it will allow licensed platform operators to provide non-securities brokerage services to retail investors.
The service of cryptocurrency trading is subject to compliance with a series of appropriate investor protection measures, including business with customers.
measures in terms of establishment, token inclusion, token due diligence program and information disclosure.
1. Establish business relationships and knowledge assessment with customers
Regulators are ready to allow virtual asset trading platforms to accept business from retail investors, but require them to take steps to protect investors. One of the measures is to assess investors' understanding of virtual currencies. For example, check whether they have taken any courses, have relevant work experience, and how many times they have bought and sold virtual currency before. The point is, as long as they have bought and sold five or more times in the past three years, it cannot be assumed that they understand enough. Even if retail investors understand virtual assets, platforms still have an obligation to assess their risk tolerance.
In general, if a platform wants to accept retail investors, it must first prove that investors have sufficient understanding of the characteristics and risks of virtual currencies and assess their risk tolerance.
2. The platform needs to establish general token inclusion criteria.
If the platform wants to accept any currency for trading, it must do due diligence on it. Now regulators are relaxing the rules. The platform only needs to consider the regulatory status of virtual assets in Hong Kong, not around the world. For example, see whether this virtual currency is a security token in Hong Kong. However, the platform still has to ensure that its operations comply with the laws of all jurisdictions in which it does business.
Because if it is illegal in other places, it will still affect the platform's operating qualifications in Hong Kong.
