The Securities and Futures Commission (SFC) of Hong Kong has released new guidelines for virtual asset trading platforms, including a licensing framework for crypto service providers.
The regulator is seeking public opinion on whether licensed platforms should be allowed to serve retail investors and under what investor protection measures these services should be offered.
The SFC has also proposed checks on the operator’s liquidity and whether its holdings are concentrated or controlled by a small number of individuals or entities. The agency said in the consultation document that it is willing to hear feedback on business models and demand for derivatives from industry participants.
In a related development, Huobi Global’s Justin Sun has announced that the exchange is applying for a crypto trading license in Hong Kong, which is a major step for the exchange in continuing to operate in a compliant and regulated manner.
With the new license, Huobi will be able to expand its services and offerings to customers in Hong Kong, providing a wider range of crypto trading and investment options. Huobi is also launching a new exchange in Hong Kong, fully compliant with local regulations, and offering a range of trading pairs and services to customers.
The new exchange will focus on providing trading services for institutional investors and high-net-worth individuals in Hong Kong, positioning the exchange as a trusted and secure platform for larger investors in Asia who are looking to enter the crypto market.
The proposed SFC rules suggest that licensed platforms should assess clients’ risk profiles, set limits to ensure their exposure is “reasonable,” and offer only tokens which satisfy the SFC’s criteria for an “eligible large-cap virtual asset.”
The SFC proposes operators provide a compensation arrangement that it must approve to cover risks. Operators will have to monitor daily the amount of customer assets held and adjust the arrangement accordingly.