Hong Kong set to shortlist crypto tokens for retail

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HONG KONG, Jan 11 (Reuters) – Hong Kong’s securities watchdog will offer a subset of tokens it would allow for retail investors, its chief executive said on Wednesday, as it continues with a new regulatory regime that will make the city friendlier to crypto startups.

While investor protection will continue to be the focus of the new Virtual Asset Service Provider (VSAP) regime, the Securities and Futures Commission (SFC) will also seek public input on specific safeguards for the retail, said Julia Leung, chief executive of the commission.

“Over the past year, virtual assets have gone from peak levels to low (price) levels. The good thing is that when the scum is removed from the system as platforms and some tokens s ‘collapse, it focuses the minds of investors and sellers on protecting investors,” Leung said during a panel discussion at the Asian Financial Forum in Hong Kong on Wednesday.

Hong Kong’s decision to allow retail trading of cryptocurrencies came after months of turmoil in the sector, with the collapse of crypto exchange FTX the latest blow.

Bitcoin, the largest cryptocurrency, has lost more than 70% of its value since hitting an all-time high in November 2021.

The SFC will begin accepting applications for VASP licenses in mid-2024, Leung said. The new crypto regime requires all trading platforms and exchanges to apply for a license if they fail to do so, which would result in fines and jail time,

Industry sources said they expect the retail consultation to begin in the first quarter. Leung said that the tokenization of investment funds and bonds will also fall under the purview of the SFC.

(This story has been reclassified to update Leung’s title in the second paragraph)

Reporting by Georgina Lee; Editing by Kim Coghill

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