Hong Kong’s Securities and Futures Commission (SFC) recently announced that it will adopt new measures to protect the interests of investors in virtual asset portfolios or funds, and explore the potential regulation of virtual asset trading platforms.

In its Statement on regulatory framework for virtual asset portfolio managers, fund distributors and trading platform operators (Statement) issued on 1 November 2018, the SFC lays down the regulatory standards for firms managing virtual asset portfolios, distributing virtual asset funds, or both; and the conceptual framework for the possible regulation of virtual asset trading platform operators. At the same time, the SFC also issued the Circular to intermediaries on distribution of virtual asset funds (Circular), which sets out the expected regulatory standards and practices in the distribution of virtual asset funds by licensed or registered intermediaries.

The measures represent a significant step forward by the SFC to expand its regulatory scope over virtual assets activities and have important implications for portfolio managers and fund distributors of virtual assets and platform operators interested in exploring virtual asset trading.

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