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Hong Kong considers removing the “Professional Investor-Only Requirement” and allowing retail investors to trade cryptocurrency.

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Securities and Futures Commission (SFC) of Hong Kong’s director of licensing and head of the fintech division both confirmed that the regulator is taking into consideration allowing retail investors to invest directly in crypto assets. “We’ve been regulating this industry for four years… We believe that now might be a good time to seriously consider whether we should keep this professional investor-only requirement in place.

SFC Director on Crypto Regulation in Hong Kong

During a panel discussion hosted by Invest HK on Monday, Elizabeth Wong, director of licensing and head of the fintech division of Hong Kong’s Securities and Futures Commission (SFC), discussed cryptocurrency regulation, according to South China Morning Post.

She clarified that compared to mainland China, Hong Kong has a different regulatory environment for cryptocurrencies. She emphasized that the fact that Hong Kong can introduce its own legislation to control cryptocurrencies “shows just how to separate Hong Kong is from the mainland.”

The director acknowledged that the SFC is currently debating whether to permit small-scale investors to “directly invest into virtual assets.” According to the publication, the regulator has been restricting cryptocurrency trading on centralized exchanges to professional investors with at least HK$8 million (US$1 million) in liquid assets over the past four years.

Noting that the crypto industry has become more compliant, the SFC director said:

We’ve had four years of experience in regulating this industry … We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.

The government of Hong Kong has been increasing efforts to lure back fintech companies that left the city due to strict regulations.

In November 2019, the SFC unveiled a regulatory framework for cryptocurrency trading platforms. Centralized exchanges may apply to the SFC for a license if they want to offer trading of at least one security token and offer cryptocurrency trading services. The regulator made it clear that “the licensee may only render services to professional investors.” The SFC granted its first license to a trading platform for digital assets in December 2020. The only licensee listed on the regulator’s website as of this writing is OSL Digital Securities Ltd.

Wong added that the SFC has relaxed some requirements in the past year to permit small investors to invest in cryptocurrency, and the regulator is examining the rules to determine whether to permit small investors to invest in exchange-traded funds with crypto exposure.

The director stated that Hong Kong will soon introduce a mandatory licensing requirement for cryptocurrency trading platforms and that the SFC will later this year seek public comments on allowing retail investors to directly invest in cryptocurrencies.

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