Hong Kong regulator updates policy for virtual asset activities

Quick Take

  • Hong Kong’s financial regulator has updated its policy for intermediaries interested in providing virtual asset-related products.

Hong Kong's Securities and Futures Commission has updated its regulatory framework with two additional investor protection measures.

The updates are aimed at intermediaries that are interested in providing virtual asset-related products to investors. Specifically, the new investor protection measures are for virtual assets categorized as complex products. As an illustration of such a complex product, the regulatory body provides the example of an overseas virtual asset, non-derivative exchange-traded fund.

SFC updates its regulatory framework

The first update involves a selling restriction. The regulator's statement said that virtual asset-related products which are considered complex products should only be offered to professional investors.


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The second update tasks intermediaries with setting up a way to assess whether their clients have knowledge of investing in virtual assets, or virtual asset products. This "virtual asset-knowledge test" must be passed before the intermediary can proceed with a transaction. However, the intermediary can proceed to execute a transaction with clients who lack the knowledge specified in the test, only if they offer sufficient training to the client. Institutional professional investors and qualified corporate professional investors are exempt from this test.

"The SFC and the HKMA have reviewed their existing policy provided for intermediaries which wish to engage in virtual asset-related activities. The policy is updated in light of the latest market developments and enquiries from the industry seeking to further expand retail access through intermediaries and to allow investors to directly deposit and withdraw virtual assets to and from intermediaries with appropriate safeguards," the announcement said.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].


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