The Hong Kong SFC has moved to update the Crypto market regulations following new market developments

The Hong Kong Securities and Futures Commission (SFC) has announced plans to update its framework on cryptocurrency sales and requirements amid evolving market developments in the digital asset industry.

In the regulator's upcoming reform notice, which will be published on October 20, five major sections are linked to the crypto industry.

These include distribution of virtual assets (VA) related products and crypto dealing services, asset management platforms, advisory services and implementation standards.

The SFC emphasized that while VA expansion has overtaken previous regions and is increasing in popularity, the global regulatory landscape remains uneven.

There are still risks associated with investing in digital assets, such as anti-money laundering (AML) and counter-financial terrorism (CFT).

However, the SFC and Hong Kong authorities prioritize investor protection as the cryptocurrency regulatory landscape evolves.

This is followed by updated strict measures and requirements to prevent risks associated with these properties.

The General Amendment Notice states that restrictions will be imposed on the sale of certain properties.

For example, complex products related to VA, such as crypto exchange-traded funds and products outside of Hong Kong, are only available to professional investors.

Additionally, brokers connected to the crypto space assess whether investors have sufficient knowledge of the VAs business before making any transactions.

Hong Kong's latest regulatory landscape control

At press time, there is no specific legislative policy governing virtual assets (VA) in Hong Kong, and no agency is responsible for monitoring the evolving market landscape.

However, several financial regulators have issued guidelines to regulate the industry. These include the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC) and the Insurance Authority (IA).

If a VA has security features as defined in the Hong Kong Securities and Futures Ordinance (SFO) Cap 571, it will be regulated by the SFC and applicable laws.

The latest regulatory announcement comes after more than 2,300 users of the JPEX crypto exchange filed a series of complaints, involving the loss of millions in cash and property.

The SFC stated that the trading platform in Dubai operated without a license for VA trading.

The investigation revealed that most of the victims were novice investors who were promised high returns. Fake Exchange has partnered with influencers to promote unregistered products and services.

In order to prevent a recurrence of the JPX scandal and to provide regular protection to investors, the SFC has established a team dedicated to the Crypto Center for Illegal Activities in cooperation with the Hong Kong Police Force (HKPF).

According to the official announcement on October 4, the new team will continue to investigate the JPEX scandals, and more arrests will follow.