Hong Kong Plans to Allow Retail Investors To Trade Larger Cryptocurrencies

Over the last few months, Hong Kong has been hinting at re-establishing itself as the crypto hub in Asia and working its way to relax crypto trading in the region. As per the latest development, Hong Kong has outlined a plan of allowing retail players trader larger digital tokens like Bitcoin and Ethereum.

In a consultation paper on Monday, February 20, regulatory body Securities and Futures Commission (SFC) noted that they would allow individual investors to trader larger coins on licensed crypto exchanges. However, the exchanges need to ensure that they provide the necessary safeguards such as risk profiles, knowledge tests, and reasonable limits on exposure are put in place.

However, the agency hasn’t explicitly mentioned which large tokens could retail investors trade. Instead, it noted that the coins should be included in at least two acceptable, investible indexes from independent providers. One of the indexes should have an experience in the traditional financial sector.

The consultation period will end next month on March 31. The goal is to allow retail trading with the application of new licensing regime for crypto exchanges due on June 1. In the briefing earlier today, an SFC spokesperson said that the two largest cryptocurrencies - Bitcoin (BTC) and Ether (ETH) - are likely to be listed on Hong Kong platforms.

As said, Hong Kong has hinted towards a pro crypto stance since Last October 2022 as part of its efforts to restore the city’s credentials as a financial sector. However, regulators are being careful concerning last year’s crypto rout and are seeking to establish a proper regulatory framework to protect investors.

Over the last few months, the Hong Kong government is making key announcements. This includes allowing the exchange-traded-funds (ETFs) to invest in the CME Group Bitcoin and Ether futures. Earlier this month, the Hong Kong government also sold.

As the West tightens its regulatory grip on the crypto space, Hong Kong sees an opportunity here to grab the market share. Some of the prominent crypto leaders are also looking East amid the current regulatory crackdown in the US.

In his recent tweet, Gemini co-founder Cameron Winklevoss wrote: "My working thesis atm is that the next bull run is going to start in the East. It will be a humbling reminder that crypto is a global asset class and that the West, really the US, always only ever had two options: embrace it or be left behind. It can't be stopped. That we know. Any government that doesn't offer clear rules and sincere guidance will be left in the dust. Quickly”.

In another development, Huobi Global’s chief Justin Sun announced that they are applying for a crypto trading license in Hong Kong, fully compliant with the local regulations. Huobi plans to set up a local exchange for offering its services to institutional investors and high-net individuals in Hong Kong.