Hong Kong to only allow investing in highly liquid virtual assets

Hull Invest

Julia Leung, chairman of Hong Kong’s Securities and Futures Commission (SFC), said the commission will only allow retail investors to trade highly liquid crypto assets.South China Morning Post report.

Hong Kong’s Finance Minister Paul Chan announced on January 9 that the government will begin issuing licenses to allow cryptocurrency exchanges to offer trading services to retail investors from June 2023.

However, newly-appointed SFC chairman Julia Leung said trading in crypto assets would be limited to highly liquid instruments.

Leung said some cryptocurrency exchanges list more than 2,000 assets, but the SFC will not allow retail investors to trade them all. Mr Leon said:

“We set the standard to allow retail investors to trade only major crypto assets.”

The SFC chairman added that only highly liquid assets will be put on the trading list. Trading illiquid assets is risky as retail investors are susceptible to market manipulation.

She said regulators will work to ensure that approved exchanges have sufficient liquidity to handle volatile market conditions.

Additionally, June 2023 regulatory guidelines will require cryptocurrency exchanges to have risk management, internal controls, and appropriate managerial arrangements to protect customer assets.

In addition, Leung said the SFC will work with the Hong Kong Stock Exchange to enable listed exchanges to disclose climate risks.

Posted In: Hong Kong, Regulation

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