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The Securities and Futures Commission (SFC) of Hong Kong has announced that it will be including new policies on digital currencies. This comes amidst “latest market developments and enquiries” that have come in from the industry.
In a post, the SFC noted that the new guideliness will dictate who can hold certain digital currencies. According to the regulator, only professional investors will be allowed to hold certain cryptocurrency products and assets. Any intermediarues in the space will also be urged to assess whether clients have sufficient knowledge to invest in digital currencies. As noted by the SFC:
“Although virtual assets are becoming more popular in some parts of the world, the global regulatory landscape remains uneven… The risks associated with investing in virtual assets identified by the SFC back in 2018 continue to apply.”
Under the new rquirement, digital currencies and virtual assets are considered “complex products”. This means they will be subject to other financial products defined similarly. Other assets include cryptocurrency exchange-traded funds (ETFs) issued outside of Hong Kong.
The JPEX scandal
The news comes following the saga related to the JPEX cryptocurrency exchange. The country’s SFC noted in September that more than 1000 complaints had poured in regarding the exchange. Users have faced millions of dollars in losses as a result the unlicensed exhange. While the exchange blames the liquiduty crisis, the SFC issued a warning to the exchange for operating without a license. Six JPEX employees have since been arrested for operating the unlicensed exchange in the region.
It remains to be seen whether the SFC’s new policies are because of the JPEX scandal. The regulator did note, though, that it would be increasing the support and information for crypto investors to protect them from risk. Following this, the Hong Kong Police Force has also formed a group with the SFC to monitor illicit and malicious activity in the market.