Hong Kong watchdog outlines plans to regulate cryptocurrency industry

Hong Kong’s securities watchdog has announced plans to regulate cryptocurrency exchanges and funds that invest in digital assets to protect investors.

The Securities and Futures Commission said it is considering regulating cryptocurrency exchanges and crypto portfolio managers through its “sandbox” or by applying existing regulations adapted to the risks associated with digital assets.

Under current rules, trading of cryptocurrencies is not regulated by the SFC unless the digital assets are classed as securities or futures contracts.

“The measures announced today allow us to regulate the management or distribution of virtual asset funds in one way or another so that investors’ interests would be protected either at the fund management level, at the distribution level, or both,” said Ashley Alder, SFC chief executive.

Global regulators have increasingly turned their attention to cryptocurrencies as the value of the digital assets skyrocketed in 2017.

Japan ruled in 2017…