The Hong Kong Securities and Futures Commission changes crypto rules, citing market developments.

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Over a month had passed when news finally broke regarding the distressing predicament faced by over a thousand users who suffered financial setbacks at the hands of the JPEX cryptocurrency exchange.

The Securities and Futures Commission (SFC) of Hong Kong, in response to the latest market developments and inquiries from the industry, made a resounding declaration. On the 20th of October, the SFC disclosed that, under the revamped directives, specific virtual currency offerings would solely be accessible to seasoned investors. Furthermore, stakeholders within the cryptocurrency sphere are now mandated to evaluate the financial acumen of their clients before engaging in any transaction involving virtual assets.

“The global regulatory landscape remains a patchwork, despite the growing popularity of virtual assets in certain regions,” emphasized the SFC. “The risk factors associated with virtual asset investments, initially identified by the SFC in 2018, remain as pertinent as ever.”

Under the new requirements, virtual assets are categorized as “complex products” by the SFC, and they are subjected to the same regulatory framework as analogous financial instruments. Notably, cryptocurrency exchange-traded funds and products originating outside the jurisdiction of Hong Kong are offered as instances of complex products.

Many cryptocurrency enthusiasts in Hong Kong are still grappling with the repercussions of the scandal that enveloped the JPEX cryptocurrency exchange. In September, the SFC made a startling revelation, indicating that it had received a staggering 1,000-plus grievances linked to JPEX. These grievances from users detailed losses amounting to millions of dollars. Subsequently, local law enforcement apprehended six JPEX staff members for their involvement in an unlicensed cryptocurrency exchange.

While the SFC’s recent policy adjustments might not be directly attributable to the JPEX controversy, it’s worth noting that the regulator expressed its intention in September to intensify efforts to apprise cryptocurrency investors of potential risks. In October, the Hong Kong Police Force and the SFC established a collaborative task force with the primary objective of vigilantly monitoring and investigating potential illicit activities associated with digital assets.