Industry insiders told the South China Morning Post that financial services firms in Hong Kong, China, are scrambling to lay the framework for retail clients to be able to trade virtual assets in the upcoming few months.
Digital asset leader Robert Lui of Deloitte Hong Kong said:
"We have noticed that many local brokers and fund managers have come to us for help regarding the new regulatory regime's licensing requirements."
The Anti-Money Laundering and Counter-Terrorist Financing Act was amended by the Legislative Council last month, and as of June this year, virtual asset service providers will be subject to a new licensing framework under the supervision of the Securities and Futures Commission (SFC).
Virtual assets are highly liquid and have a high market value. Customers can presently access trading services in Hong Kong-listed ETF futures based on Bitcoin and Ethereum without the need for any special additional licenses from brokers. Before providing active trading in virtual assets like cryptocurrencies and related futures products, the SFC will still need to give its further approval, Lui continued.
A consultation document on how to lift the current ban on professional investors or those with at least HK$8 million ($1.03 million) in bankable assets is expected to be released by the SFC, opening up trading in virtual assets to normal investors.
The surge in demand for virtual assets has given Hong Kong's goal of strengthening its position as a regional center momentum.
"Brokers that want to trade virtual assets for small investors must have dependable officers who are knowledgeable about virtual assets. In order to protect the interests of their clients, businesses must also demonstrate to the SFC that they have internal controls, client money custody, and insurance plans, Lui continued."
The GEM-listed Victory Securities and Interactive Brokers are the first two brokerage firms in the city to get SFC approval to trade virtual assets only for professional clients.
Hong Kong is still open to the policy allowing investors and brokers to engage in virtual asset trading despite FTX's demise. The establishment of restrictions, however, continues to be supported by the government as providing better protection.
