Hong Kong’s Securities and Futures Commission (SFC) has revised its guidance, widening the scope of spot products sales to include a broader range of clients. The updated policy, announced in a circular on Friday, is a response to evolving market trends and industry inquiries seeking enhanced retail access through intermediaries. It also allows investors to directly deposit and withdraw virtual assets to and from intermediaries, ensuring appropriate safeguards.
This regulatory shift comes amid growing interest in spot bitcoin exchange-traded funds (ETFs). JPMorgan recently suggested that the approval of spot bitcoin ETFs in the U.S. could be imminent, potentially before the January 10 deadline for the Ark 21Shares application. Notably, this change follows the authority’s accusations against JPEX, a crypto exchange operating without a license, resulting in arrests and the imminent publication of details of licensed applicants.
However, it’s worth noting that Hong Kong remains cautious about overseas virtual asset (VA) products, deeming them “complex” and consequently risky. The circular emphasizes that such products should only be offered to professional investors. For instance, an overseas VA non-derivative ETF is likely to be classified as a complex product.
To ensure responsible trading, potential clients interested in these products will need to undergo a one-off test assessing their investing knowledge and demonstrate sufficient net worth to manage the associated risks of virtual asset trading. Intermediaries are also mandated to furnish clients with comprehensive risk disclosure statements.
Hong Kong’s aspirations to establish itself as a virtual asset hub became evident in June when it introduced a new regulatory regime, accepting applications for crypto trading platform licenses. In August, the first set of licenses was granted, marking a notable shift from 18 months of regulatory hostility towards the crypto industry.
