Hong Kong’s securities regulator said its crypto licensing framework would include steps to protect ordinary investors as it rolls in tighter requirements for digital asset companies from June 1.
After FTX’s bankruptcy last year, Hong Kong allowed retail cryptocurrency trading.
All trading platforms and exchanges must apply for a license or face penalties and jail time.
In a news conference on Tuesday, Keith Choi, interim head of intermediaries at the Securities and Futures Commission (SFC), advised operators to screen retail traders from China, where crypto trading is outlawed.
“Operators have the responsibility to comply with the laws and regulations in the jurisdictions in which it provides services,” he said.
A February SFC consultation on digital asset trading proposed investor protections. Submissions totaled 152.
Companies must set an exposure limit for retail investors and only allow retail trading on highly liquid tokens released for at least one year.
The new system covers unlicensed platform service marketing.
“It is an offence to issue advertisement related to an unlicensed platform, this would cover (social media influencers) personally promoting services (of these platforms) to Hong Kong investors,” said SFC fintech unit head Elizabeth Wong.
After the collapse of the exchange FTX last year raised worries about consumer protection, the International Organization of Securities Commissions (IOSCO) presented the first worldwide crypto asset regulation strategy on Monday.
Bitcoin recovered 75% to $27,431 on Tuesday, but some investors are unfazed. Since March’s banking crisis, it’s been above $26,000.
SFC applications begin June 1.