### The proposed regulatory framework aims to enhance investor protection while promoting the development of the virtual asset trading industry in Hong Kong.

By launching a consultation, the Securities and Futures Commission (SFC) is seeking to gather feedback from the public and industry stakeholders to ensure that its proposed regulatory framework is appropriate and effective. This collaborative approach is in line with the SFC's commitment to promoting a fair, transparent, and competitive virtual asset trading environment.



The SFC is the primary regulator of Hong Kong's securities and futures markets. It was established in 1989 as an independent statutory body under the Securities and Futures Ordinance (SFO), which provides the legal framework for the regulation of the securities and futures industry in the country.



All cryptocurrency exchanges offering trading services in Hong Kong are required to apply for a license from the SFC under the proposed regulation for digital assets and crypto businesses. Additionally, in order to preserve a secure investment environment, only highly liquid crypto assets like Bitcoin and Ethereum would be accessible for trading by retail investors.



The SFC's decision to seek feedback from the public rather than making its own rules shows a willingness to consider different perspectives and potentially incorporate them into the final regulatory framework. This can help to ensure that the regulation is effective, fair, and appropriate for the unique circumstances of the Hong Kong market.



Overall, the SFC's thoughtful and inclusive approach to regulating crypto exchanges is a positive development for the industry and for investors in Hong Kong. It demonstrates a commitment to responsible regulation and to promoting a healthy and sustainable ecosystem for cryptocurrencies and digital assets.



You may find the SFC’s Consultation Paper [here](https://apps.sfc.hk/edistributionWeb/api/consultation/openFile?lang=EN&refNo=23CP1).





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