The Securities and Futures Commission of Hong Kong has brought in a new regulatory regime for virtual asset trading platforms. Platforms which operate in Hong Kong and offer trading of at least one security token may now apply for licences.

A recent position paper says that the SFC will only grant licences to platform operators that are capable of meeting standards comparable to those which apply to licensed securities brokers and automated trading venues, with other rules for virtual assets added.

Among the stipluations is one that platform operators must offer their services exclusively to professional investors, only service clients who have sufficient knowledge of virtual assets and maintain stringent criteria for the inclusion of virtual assets on their platforms. In addition, licensed platforms will be placed in the SFC Regulatory Sandbox for a period of close surveillance.

The SFC’s new initiative is totally in line with the wishes of the International Organisation of Securities Commissions or IOSCO.

The SFC is also warning investors about the risks associated with the purchase of virtual asset futures contracts because they are largely unregulated, full of debt and have extremely volatile prices.