New Laws in Hong Kong Allow Retail Investors to Trade Bitcoin
In a move to establish itself as a digital-asset hub, Hong Kong has announced that retail investors can now engage in Bitcoin and crypto trading under its newly introduced rulebook for the sector.
This development comes amidst contrasting approaches between the industry and regulators across other Asian regions.
Hong Kong and Dubai are actively seeking to attract investments in the Bitcoin and crypto industry, while Singapore intends to implement restrictions on retail investors' participation.
Additionally, South Korea is expected to enact its initial dedicated legislation concerning Bitcoin and cryptocurrencies, following a string of scandals.
On Tuesday, Hong Kong's Securities and Futures Commission released the outcomes of its consultation on retail participation, confirming its decision to allow individual investors to trade Bitcoin and other cryptocurrencies starting from June 1st. This aligns with the commencement of a new licensing regime for virtual-asset platforms.
Hong Kong's framework aims to attract Bitcoin and cryptocurrency firms while ensuring investor protection, as part of its endeavor to regain its position as a pioneering financial hub.
However, the acceptance of digital assets remains controversial following a market downturn in 2022, which led to several bankruptcies, including the notable collapse of FTX.
The SFC stated that licensed platforms should “comply with a range of robust investor protection measures covering onboarding, governance, disclosure and token due diligence and admission, before providing trading services to retail investors.”
To ensure safety and security, the safeguards encompass measures such as knowledge tests, suitable risk profiling, and reasonable limits on exposure.
Following the authorization by officials, exchange-traded funds (ETFs) focused on investing in Bitcoin and Ether futures offered by CME Group Inc. have already been given the green light, leading to a surge in the introduction of new products in the market.