On Friday, Hong Kong’s financial authorities issued new guidelines restricting retail investors’ access to financial instruments that invest directly in digital assets. The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) issued a joint circular. This circular restricts sales of non-derivative products such as crypto spot exchange-traded funds (ETFs), including offshore goods, to professional investors only.
According to authorities, crypto spot markets are “completely unregulated at the moment” and involve high risks. Investors who have less experience and understanding may lose their capital. Retail investors may still be given derivatives-based products traded on SFC-approved exchanges, such as Bitcoin futures ETFs, which are considered safe and risk-free.
Hong Kong’s concern for retail investor risks has been echoed overseas, including in the U.S., where a Bitcoin spot ETF is yet to be approved, while Bitcoin futures ETFs hit the market last year. The SFC and the HKMA have allowed intermediaries a six-month grace period to comply with the new rules.
Who are the professional investors in Hong Kong?
- An individual with a portfolio worth at least HKD 8 million.
- A trust company with total assets of at least HKD 40 million that have been placed under one or more trusts for which it functions as a trustee.
