With the necessary safeguards in place, the Hong Kong regulator approves a wider range of retail virtual asset investments.

With the necessary safeguards in place, the Hong Kong regulator approves a wider range of retail virtual asset investments.

In light of recent market developments, Hong Kong's financial regulators, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), have published new guidelines on how intermediaries are to conduct activities related to virtual assets.

The regulators emphasized the disparity in the distribution of products related to digital assets, the offering of asset dealing services, the guidance to asset management services, advisory services, etc. in a recent circular intended to direct market participants.

Instead of restricting access to virtual asset products to "professional investors only," the SFC and HKMA have slightly changed their stance to accommodate a larger spectrum of clients. ".

The policy has been revised to reflect the most recent changes in the market and industry inquiries aimed at extending retail access through intermediaries and enabling investors to deposit and withdraw virtual assets directly to and from intermediaries while maintaining the necessary security measures. ".

This latest announcement follows the JPEX incident, which raised concerns from local regulators and led to updates in the market.

Following the JPEX scandal, Louise Ho Pui-shan, Hong Kong's Commissioner of Customs and Excise, called for market scrutiny and stated that local investors needed a policy change as institutional investors were getting ready to launch spot ETFs.

steps to protect investors.

Certain restrictions still apply to intermediaries that offer to retain investors, on top of the general complex product regime issue surrounding products related to virtual assets.

First of all, professional investors should be the only ones offered other VA-related products, with the exception of certain ones like virtual asset futures contracts and other regulated markets.

In order to provide services to retail clients, intermediaries must also determine whether the clients possess the necessary knowledge to invest in specific products or to have such trades executed on their behalf.

If the response is negative, these institutions can only move forward if the client has received sufficient instruction regarding the nature of cryptocurrencies and related products.

These conditions do not apply to professional investors.

Due diligence and solicitation.

The circular also requires intermediaries to refrain from selling products that have not been approved and to adhere to all selling restrictions within the jurisdiction.

The company's responsibility in terms of solicitations and recommendations is to make sure the products are appropriate, which is to be done in the best interests of the client while taking certain factors like financial status and risk tolerance into consideration.

Intermediaries also have a responsibility to make sure that all parties, with the exception of institutional clients, fully comprehend the important terms of the agreements and that risk disclosures are made public.

.