Hong Kong’s Securities and Futures Commission (SFC) has recently implemented two significant updates to its regulatory framework, focusing on enhancing investor protection in the realm of virtual assets. These changes are specifically tailored for intermediaries intending to offer virtual asset-related products to investors, particularly those categorized as complex products.
Complex Products Selling Restriction
The first update centers around a stringent selling restriction. According to the official statement released by the regulator, virtual asset-related products classified as complex should exclusively be offered to professional investors. This move reflects the SFC’s commitment to safeguarding retail investors from the risks associated with intricate financial instruments within the virtual asset market.
Virtual Asset-Knowledge Test
In the second update, intermediaries are now tasked with implementing a rigorous assessment procedure to evaluate their clients’ knowledge of investing in virtual assets or related products. Termed the “virtual asset-knowledge test,” clients must successfully pass this assessment before intermediaries can proceed with any transaction. However, intermediaries have the flexibility to execute transactions with clients lacking the specified knowledge if they provide comprehensive training to bridge the gap. Notably, institutional professional investors and qualified corporate professional investors are exempt from this knowledge test requirement.
In an official joint statement, the SFC and the Hong Kong Monetary Authority (HKMA) emphasized the importance of these updates. “The SFC and the HKMA have reviewed their existing policy provided for intermediaries engaged in virtual asset-related activities. The policy is updated in light of the latest market developments and industry inquiries, aiming to broaden retail access through intermediaries while ensuring investors can directly deposit and withdraw virtual assets with appropriate safeguards in place.”
These measures represent a significant step towards aligning Hong Kong’s regulatory framework with the evolving landscape of virtual assets. By prioritizing investor protection and ensuring that market participants possess the necessary expertise, the SFC aims to foster a safer and more transparent environment for virtual asset investments. Read Similar Story
Source: TheBlockTheBlock
