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Hong Kong to allow retail investors to buy big-cap crypto tokens in boost to global digital-asset hub ambitions

  • Licensed virtual-asset platforms to only offer ‘eligible large-cap virtual assets’ to retail investors
  • SFC consultation paper underlines Hong Kong’s ‘commitment towards being the leading Web3 hub’, co-founder of local virtual-asset services provider Tykhe Capital says

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The platforms will need to conduct knowledge assessments on investors before serving them, and set exposure limits for customers depending on their financial situations, the SFC says. Photo: Bloomberg
Xinmei Shen
Hong Kong will allow retail investors to buy big-cap cryptocurrency tokens such as bitcoin and Ether, according to the latest policy proposal by Hong Kong’s securities watchdog.
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Retail investors will be allowed to trade liquid digital tokens on licensed virtual-asset platforms, which will provide certain regulatory oversight and investor protections to once vibrant but unregulated cryptocurrency investment activities, the Securities and Futures Commission (SFC) said on Monday.

These platforms, to be licensed through a cryptocurrency regulatory regime that comes into effect on June 1 this year, can only offer what the SFC calls “eligible large-cap virtual assets” to retail investors. Such tokens are included in at least two acceptable indices issued by at least two independent index providers, the SFC said. The consultation period for the policy will end on March 31.

“This consultation paper underlines the Hong Kong government’s commitment towards being the leading Web3 hub,” said Ken Lo, co-founder of Hong Kong-based virtual-asset services provider Tykhe Capital Group. Tykhe Capital’s subsidiary Pioneer recently acquired an SFC licence to manage a portfolio of 100 per cent virtual assets. “I believe that a new wave of capital, talent and companies will set up office in Hong Kong to capitalise on these opportunities.”

The watchdog’s highly anticipated consultation paper comes as governments around the world start to rein in the freewheeling cryptocurrency market following a series of meltdowns last year, most notably including that at FTX, previously the world’s second-largest cryptocurrency exchange.
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The SFC said that collapses in the past year “resulted in substantial losses to tens of millions of investors” and exposure risks arising from the “increasing interconnectedness” between the virtual-asset market and the traditional financial system. It also highlighted the need for effective regulation, the watchdog added.

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