The securities market in Hong Kong has got new regulation aimed at crypto funds.
The new rules were developed and launched by the Hong Kong securities market regulator. According to the released regulation, the asset managers with cryptos accounting for more than 10% of their portfolio will have to pass certification to get the required license. Specifically, the exchanges dealing only with large professional investors will reportedly be able to join sandbox for checking AML and other rules.
The regulator's statement reads:
"In order to afford better protection to investors, the SFC considers that all licensed portfolio managers intending to invest in virtual assets should observe essentially the same regulatory requirements even if the portfolios (or portions of portfolios) under their management invest solely or partially in virtual assets, irrespective of whether these virtual assets amount to "securities" or "futures contracts".
The local market players have been waiting for the official legal framework for the crypto sector. Moreover, many trading platforms dealing with cryptos (OKEx, BitMEX) have chosen Hong Kong seeing its autonomous position, especially once Beijing decided to ban cryptocurrencies last year.
Those platforms that decide to enter the new sandbox will reportedly have to prove that they can manage risks and comply with the legal norms. At the same time, some market players can consider this regulation too strict, since they will have no chance for financial stimulation measures or derivatives and futures trading.
The market experts believe this decision will be a good development for the industry, though the firms will face challenges to comply with all rules.