Hong Kong

## Retail_Trading_Status in Hong Kong

**Report Date:** 2025-06-26

**Topic:** Retail_Trading_Status

**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

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### 1. Current Status

**Allowed-Regulated**

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### 2. Detailed Narrative Explanation

Hong Kong has transitioned to a comprehensive regulatory regime for virtual assets, including cryptocurrencies, firmly establishing retail trading as **Allowed-Regulated**. This move signifies a significant shift from its previous, more cautious approach, which primarily limited cryptocurrency trading to professional investors.

Historically, Hong Kong's Securities and Futures Commission (SFC) had adopted a regulatory framework that largely restricted virtual asset trading platforms (VATPs) to serving professional investors (individuals with a portfolio of at least HK$8 million or equivalent). However, recognizing the growing retail interest and the need for investor protection, the regulatory landscape has evolved.

A key development was the introduction of a new licensing regime for centralized VATPs under the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022 (AMLO), which came into effect on June 1, 2023. This regime mandates that all VATPs carrying on business in Hong Kong, or actively marketing to Hong Kong investors, must be licensed by the SFC.

Crucially, this new regime opened the door for licensed exchanges to offer services to retail investors, provided they comply with a robust set of investor protection measures. These measures include stringent know-your-customer (KYC) and anti-money laundering (AML) requirements, secure custody of assets, and specific token admission criteria. Licensed platforms must also conduct suitability assessments to ensure that retail investors understand the risks involved before trading.

The SFC has emphasized that retail access would be permitted for "eligible large-cap virtual assets" listed on at least two acceptable and independent indices. This approach aims to filter out smaller, potentially riskier tokens for retail participation.

Furthermore, the SFC has issued warnings regarding the risks associated with virtual asset trading, urging investors to exercise caution and understand the products they are investing in. The regulatory framework also includes provisions for ongoing supervision and enforcement by the SFC to ensure compliance by licensed entities.

The transition period for existing platforms to comply with the new regime has been a key focus. Platforms operating in Hong Kong before the new regime were required to apply for a license or prepare for an orderly wind-down of their operations if they did not intend to seek a license.

This comprehensive regulatory framework, encompassing licensing, investor protection measures, and market oversight, firmly places Hong Kong in the "Allowed-Regulated" category for retail cryptocurrency trading. It reflects a deliberate policy choice to embrace financial innovation while mitigating associated risks, particularly for retail participants.

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### 3. Specific, Relevant Text Excerpts

*   **Securities and Futures Commission (SFC) - June 1, 2023:** "The new licensing regime for virtual asset trading platforms (VATPs) came into effect today. Under the new regime, all centralised VATPs carrying on business in Hong Kong or actively marketing to Hong Kong investors are required to be licensed by the SFC... The SFC will also provide regulatory guidance to licensed VATPs, including on their interaction with retail investors. Licensed VATPs will be permitted to serve retail investors provided that they comply with a range of robust investor protection measures covering onboarding, governance, disclosure and token due diligence and admission."
*   **Consultation Paper on the Proposed Regulatory Requirements for Virtual Asset Trading Platform Operators Licensed by the Securities and Futures Commission - February 2023 (SFC):** "Under the proposed new regime, the SFC will allow licensed platform operators to serve retail investors, provided that a number of robust investor protection measures are put in place. These include ensuring suitability in onboarding clients, enhanced token due diligence, admission and disclosure, and clear policies and procedures for the inclusion and removal of virtual assets on their platforms." (This consultation paper laid the groundwork for the current regime allowing retail access). While the direct link to the consultation paper might be superseded by the final guidelines, its content is reflected in the subsequent regulatory actions. A summary of its proposals leading to retail access is widely available.
*   **Hong Kong Monetary Authority (HKMA) - Various Circulars and Statements:** While the SFC is the primary regulator for VATPs, the HKMA has also been involved in clarifying the regulatory expectations for authorized institutions (banks) engaging in virtual asset-related activities, including those involving retail customers. For instance, the HKMA has issued guidance on the risk-based approach banks should adopt when dealing with virtual asset service providers (VASPs) and their customers.
*   **Legislative Council of Hong Kong - Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022:** "The Bill introduces a licensing regime for virtual asset service providers (VASPs) to impose statutory anti-money laundering and counter-terrorist financing (AML/CTF) obligations on VASPs. It also empowers the Securities and Futures Commission (SFC) to regulate virtual asset (VA) activities under the Securities and Futures Ordinance (SFO) (Cap. 571) to protect investors." This legislation underpins the SFC's power to regulate and license platforms, including those serving retail investors.
*   **SFC - May 23, 2023 (Press Release on upcoming retail access):** "The Securities and Futures Commission (SFC) will implement a new licensing regime for virtual asset trading platforms (VATPs) on 1 June 2023. The SFC also announced today that it is prepared to accept applications from VATP operators to serve retail investors, provided that robust investor protection measures are in place."

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### 4. Direct, Accessible URL Links

1.  **SFC Press Release - New licensing regime for virtual asset trading platforms starts today:** [https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR50](https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR50)
2.  **SFC Press Release - SFC to implement new licensing regime for virtual asset trading platforms and allow retail access to licensed platforms:** [https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR46](https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR46)
3.  **Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022 (Gazetted Version):** [https://www.gld.gov.hk/egazette/pdf/20222649/es12022264926.pdf](https://www.gld.gov.hk/egazette/pdf/20222649/es12022264926.pdf)
4.  **SFC Circular on Virtual asset trading platforms – transitional arrangements of the new licensing regime:** [https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/doc?refNo=24CI05](https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/doc?refNo=24CI05) (Provides context on the implementation and transition for platforms, including those intending to serve retail investors).
5.  **SFC Guidelines for Virtual Asset Trading Platform Operators:** (While a direct link to a single encompassing PDF can change, the SFC website's section on Virtual Asset Activities contains the relevant guidelines and updates). A good starting point is the SFC's dedicated page for Virtual asset activities: [https://www.sfc.hk/en/Rules-and-standards/Virtual-asset-activities](https://www.sfc.hk/en/Rules-and-standards/Virtual-asset-activities)

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