Hong Kong regulator unveils crypto investment rules for fund managers

Posted 08 October, 2019

Hong Kong's securities and futures commission have released the final edition of the crypto investment guideline for fund management companies. The document was unveiled on October 4.

The report reads:

"These terms and conditions set out the principles and requirements (where applicable) with which corporations licensed by the Securities and Futures Commission (SFC) should comply when managing portfolios (or portions of portfolios)1 that invest in Virtual Assets (as defined in Section I below) and meet the de minimis threshold (see Section I below)."

The document is believed to determine the work order of the funds that invest more than 10% of their portfolio into cryptocurrencies.

The guideline suggests that cryptocurrencies are considered as a digital representation of the value and can be a digital currency, utility or security tokens or fiat-backed tokens.

Along with digital assets, the guideline contains requirements for the fund management companies. In particular, it was noted that such companies must have capital reaching at least HKD 3 million ($382,000), which comes in line with the requirements for SFC license for Type 9 covering asset management.

With the capital limit, the subject companies have to hire an independent legal compliance officer, 3-rd party custodian. At the same time, the fund's assets must be kept separately, including those in fiats. 

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