Hong Kong’s Securities Regulator SFC Unveils Crypto Rules

SFC unveils crypto rules; to tame the wild crypto sector

In mid-October, South China Morning Post revealed that Hong Kong’s security regulator was mulling new rules for the cryptocurrency sector. A new report indicates that the SFC unveils crypto rules that will help tame the wild cryptocurrency market.

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As per the SCMP, the new rules by the Securities and Futures Commission (SFC) will target trading platforms. Further, the rules will rope in the fund managers that invest more than 10% of their holdings in cryptocurrencies.

The rules favour institutional investors with financial depth

The new rules further ban retail investors from speculating on the prices of Bitcoin and other cryptocurrencies. Instead, only professional investors who have the financial depth to withstand huge shocks will trade. However, there is a significant possibility that preventing retail investors from entering the market will simply exacerbate volatility.

Initially, the cryptocurrency market operated in an unbridled manner which endangered especially retail investors. However, as SFC unveils crypto rules, they will seal the regulatory loophole that posed danger to all investors. In particular, there was lack of a definitive regulatory guidelines to demarcate the behavior in the nascent market.

Already, most of the market is taking the news positively. Gary Cheung, chairman of Hong Kong Securities Association lauded the move, calling it historic. He further said:

“It will boost investor protection and hence attract more mainlanders to trade cryptocurrency assets in Hong Kong. This will help Hong Kong to be among the top cryptocurrency trading centres worldwide because proper regulation is very important for attracting the big player.”

A growing call for global regulations as SFC unveils crypto rules

Further, Bloomberg quotes SFC chief Ashley Alder who was speaking at a Hong Kong fintech forum on Thursday as saying, “The market for virtual assets is still very young and trading rules may not be transparent and fair. Outages are not uncommon as is market manipulation and abuse. And there are also, I am afraid, outright scandals and frauds.”

Therefore, the SFC introduced the rules to try and bring the sector to sanity. Further, the regulator acknowledges the fact that it only has two choices; to ban or regulate cryptocurrencies. With the regulations, Hong Kong joins a growing list of countries calling for global regulations for cryptocurrencies.

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