The Hong Kong Securities and Futures Commission (SFC) published today, November 6, the “Regulation of virtual asset trading platforms” establishing new rules for licensing crypto exchanges. In order to get the license trading platforms must offer at least one security token for trading.
The new rules are based on the standards that the SFC applies to license securities brokers. It covers such aspects as asset storage, KYC and AML compliance, and prevention of market manipulation. The ruales also include additional requirements to address specific risks associated with cryptocurrencies.
For example, the SFC requires licensed platforms to offer its services exclusively to professional investors and adhere to strict criteria for listing digital assets. In addition, licensees will be placed in the SFC’s regulated sandbox for the supervision period.
The new rules will help investors identify platforms that want to be regulated, the SFC said.
The regulator noted that it does not have the authority to license and authorize platforms that provide exclusively cryptocurrencies that are not classified as securities.
Also, the SFC issued a warning to investors about the risks associated with the purchase of virtual asset futures. According to the regulator, this type of derivatives trading is mostly unregulated, with a high percentage of borrowed funds and is subject to extreme price volatility.
Earlier, the SFC has published rules for asset managers who intend to invest in cryptocurrencies.