Hong Kong’s securities regulator updates its crypto policies, citing market developments

Hong Kong's Securities and Futures Commission (SFC) has announced that it will update its policy on virtual currency sales and requirements “in light of the industry's latest market developments and demands.”

In an October 20 announcement, the SFC said that certain virtual currency products are only available to professional investors under the revised guidelines. In addition, intermediaries in the crypto space must “assess whether clients are knowledgeable about investing in virtual assets” before processing any transactions.

“While virtual assets are becoming more popular in some parts of the world, the global regulatory landscape remains uneven,” the SFC said. “The risks associated with investing in virtual assets identified by the SFC in 2018 continue to apply.

The updated requirements considered virtual assets under the SFC to be “complex products” and subject to the same guidelines as similar financial products. The Commission specifically cited cryptocurrencies and products issued outside Hong Kong as examples of complex products.

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Many crypto users in Hong Kong are angry about the scandal surrounding the JPX crypto exchange. In September, the SFC announced it had received more than 1,000 complaints related to JPEX, with users claiming losses totaling millions of dollars. Later, local police arrested six JPX employees for operating an unlicensed crypto exchange.

It's unclear if the SFC's revised policies are a direct result of the incidents around JPEX, but the regulator said in September it would step up efforts to inform crypto investors about risks. In October, the Hong Kong Police Force and the SFC established a task force aimed at monitoring and investigating illegal activities related to digital assets.

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