Hong Kong Regulator to Create Shortlist of Coins for Retail Investors - Which Crypto Will be Listed?

The Securities and Futures Commission (SFC) of Hong Kong has proposed a list of tokens that will allow retail investors to trade. Hong Kong is currently working on a new regulatory framework for the cryptocurrency industry that will attract startups.

Hong Kong proposes tokens for retail investor trading

The chief executive of the SFC, Julia Leung, noted that the regulatory body was currently focused on creating a regulatory framework for virtual asset service providers (VASPs) that will protect investors and be friendly to crypto startups.

To achieve this, the Hong Kong financial markets watchdog will gather public views about the regulatory framework that retail traders will use. While speaking at the Asian Financial Forum in Hong Kong, Leung opined that digital assets had “gone from peak to low” over the past year in terms of price.

The chief executive also said that the collapse of some tokens and platforms could be good because investors and sellers would now focus more on investor protection. The past year has seen the collapse of some of the largest crypto companies, such as Celsius, Voyager, and FTX.

The recent move by Hong Kong by Hong Kong to regulate the retail trading of cryptocurrencies comes after several months of turmoil in the crypto industry. The latest blow was dealt by the fall of FTX, which once ranked as one of the largest cryptocurrency exchanges by trading volumes.

The values of most digital assets have plummeted over the past year, leading to significant losses for cryptocurrency investors. The cryptocurrency market is highly volatile, and the highly risky nature of this industry makes it less suitable for retail traders that do not know about cryptocurrencies.

Leung noted that the SFC would begin accepting applications for a VASP license in mid-2024. Under the new crypto regulatory framework, it would be a requirement for exchanges and trading platforms to apply for an operating license. The firms that continue to offer crypto services without this license will be subject to fines or a prison sentence.

The crypto industry believes that consultations about retail trading will commence during the first quarter. Besides cryptocurrencies, the other assets that will also fall under the regulatory scrutiny of the SFC are tokenized bonds and investment funds.

Changing crypto regulations in Hong Kong

At the Hong Kong Fintech week, the country hinted at plans of re-emerging as a crypto hub. Regulators in the country have shown a willingness to discuss crypto exchange-traded funds (ETFs). The country is also opening up the crypto market to not just professional investors but also retail investors.

The current ban on crypto retail investments led these investors to use unlicensed crypto platforms, which increased the risk of losses. Hong Kong crypto investors have the chance to invest in US crypto ETFs, but the country’s regulator is looking to approve local ETFs. However, the regulators have not given specific guidelines, timelines, or standards on when these approvals will be implemented.

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