Cryptocurrency rules unveiled by SFC as Hong Kong aims to become major trading hub
- First set of rules governing the market could help turn Hong Kong into a major cryptocurrency hub, say analysts
Hong Kong’s financial watchdog unveiled on Thursday a comprehensive set of regulations governing cryptocurrencies in a move to enhance investor protection which analysts believe could help make the city a major trading centre for virtual assets, analysts said.
The new rules, announced by the Securities and Futures Commission, will target funds that invest in digital currencies as well as the trading platforms on which these virtual currency are traded. The new regime will ban retail investors from trading bitcoin via these funds or platform, but allow professional investors.
Bitcoin, which just turned 10 years old on Wednesday, has been chased by investors worldwide over the past two years, pushing its price to a high of nearly US$20,000 in December 2017, up from just US$980 at the end of 2016.
The rally came as institutional investors and funds started to invest in the expectation the virtual assets could soon find wider uses in payments, while retail investors joined the rally for short term gains.
Mainland authorities imposed a complete ban on initial coin offerings and cryptocurrency trading exchanges in September 2017, following a number of market manipulation and fraud cases. Bitcoin has been trending lower this year, and is now down two-thirds from its peak to its recent level of US$6,300.
The SFC on Thursday issued two circulars, one on the funds investing in virtual currencies and the other on trading platforms, effective immediately.