The Legislative Council of Hong Kong passed legislation that will soon open up virtual assets to retail investors, and local financial services are lining up for licensing approval.
Financial services providers in Hong Kong are already taking the first steps to provide services to retail investors, according to local reports. Brokers and fund managers in the region have reportedly asked for advice on licensing requirements ahead of new legislation.
Lawmakers in Hong Kong passed an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) in December 2022, which aligns with the region’s recent stance on broadening the possibility for crypto trading.
The amendment introduces a new licensing scheme for virtual asset service providers, which will allow retail investors the ability to trade in virtual assets. Currently, virtual asset trading is restricted to professional investors or traders with proof of at least $1 million in bankable assets.
Victory Securities and Interactive Brokers were the first two brokers in Hong Kong with SFC to trade virtual assets for their professional clients.
According to Robert Lui, the digital asset leader at Deloitte Hong Kong, retail investors will most likely be able to trade virtual assets with a large market capitalization and liquidity.
Currently Hong Kong-based brokers do not need specific licence to service clients trading Hong Kong-listed exchange-traded fund futures based on Bitcoin (BTC) and Ether (ETH). Though, those which will provide virtual asset trading will need additional SFC approval.
The new licensing was initially scheduled for Mar.1 of this year, however the date was then pushed until Jun. 1 in order to give virtual asset service providers more time to accurately prepare.
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This comes after the SFC recently appointed Julia Leung as its new chief executive. Leung started her term on Jan. 1 and is set to be in office for the next three years. She has previously spoken out about tightening local crypto regulations.
An executive from the Central Bank of Hong Kong also recently said it was looking into investor protection regulations.