Hong Kong has made a recent announcement to open up its doors to crypto asset trading and investment, which has garnered excitement from industry executives.
However, upon closer inspection of the regulatory proposals, investors need to be aware of the hidden catches and restrictions.
Starting on June 1, 2023, all centralized crypto trading platforms in Hong Kong will require licensing from the Securities and Futures Commission (SFC) to market to Hong Kong investors.
This move aims to protect investors and manage key risks that have arisen from high-profile collapses of crypto trading platforms worldwide.
Apart from licensing, tokens listed on a crypto exchange in Hong Kong will need to undergo a rigorous check on their issuers, developers, supply, demand, liquidity, technical aspects of the blockchain, marketing materials, utilities, and legal risks before they can be approved.
Furthermore, crypto derivatives will be barred, and licensed crypto exchanges will not be allowed to participate in market-making activities, and will need to have insurance to cover any potential risks.
Investors need to be aware of the potential restrictions and requirements that come with Hong Kong’s move to open its doors to crypto asset trading and investment. It is important to do your research and understand the risks involved before investing in any asset, including crypto.