Hong Kong Loosens Crypto Restrictions, Announces Plan To Allow Retail Trading Of Top Cryptocurrencies

In what seems like a giant step to achieving its goal of becoming a cryptocurrency hub, Hong Kong has announced its plan to allow retail investors to trade major crypto assets like Bitcoin (BTC) and Ethereum (ETH), underlining a major shift in its policy.

On Monday, the Securities and Futures Commission (SFC) of Hong Kong shared its plan to ease the rules restricting retail investors from purchasing crypto assets from licensed platforms and invited the public to provide insights and feedback on its planned regulation for crypto exchange platforms planning to serve retail investors in the country.

Based on the consultation paper released by the regulator, individual investors would be allowed to trade larger coins on exchanges licensed by the country's SFC, provided that safeguards like risk profiles, knowledge tests and reasonable exposure limits are in place.

While the regulator did not specifically mention which large capitalization crypto asset would be made available to retail investors, it noted that the cryptocurrencies should be on the list of investible indexes of at least two independent providers with experience in the traditional financial sector.

Interestingly, during the press briefing, an SFC spokesperson suggested that Bitcoin and Ethereum are the two biggest crypto assets by market capitalization and are most likely going to be listed in the country's cryptocurrency exchange platforms, Bloomberg reported.

The consultation period on Hong Kong's proposed regulatory requirements will end on March 31.

The SFC also encouraged crypto exchange platforms operating in the country to apply for a license if they still want to continue doing business, and those who do not wish to apply for a license are urged to shut down their operations.

The government has been behind changes to the city's crypto licensing rules, with officials keen to position Hong Kong as a financial center for digital assets. The city's central bank only last week issued the world's first tokenized green bond, raising around $100 million to invest in clean energy technology and related projects.

Hong Kong was once home to major cryptocurrency exchange platforms like Bitmex and the now-bankrupt crypto empire FTX.

It has been behind in terms of changes in crypto licensing rules despite its officials wanting to position the country as a financial center for digital assets.

On the same day as Hong Kong's SFC announcement, Tron founder and Houbi advisor Justin Sun announced that the crypto exchange platform Houbi will launch in the country and it is in the process of securing a license from the SFC.

"This is a major step for the major cryptocurrency exchange and a sign of its continued commitment to operating in a compliant and regulated manner," Sun said in a tweet.

"With the new license, Huobi will be able to expand its services and offerings to customers in Hong Kong, providing a wider range of crypto trading and investment options," he added noting that his announcement is "great news for traders and investors who are looking for a trusted and reliable platform to buy, sell, and store digital assets."

The new exchange named Huobi Hong Kong will "focus on providing trading services for institutional investors and high net worth individuals in Hong Kong. It positions the exchange as a trusted and secure platform for larger investors in Asia who are looking to enter the crypto market," Sun further said on Monday.