Licensing under the SFC (SFC Licensing)
Virtual Assets
14. What I need to do if I plan to manage portfolios that involve virtual assets?
Applicants are required to inform the SFC if they plan to manage portfolios that involve virtual assets. Applicants who intend to manage portfolio(s) with the composition of more than 10% of virtual assets are expected to comply with additional expected regulatory standards upon licensed. The expected additional regulatory standards will be imposed on applicants by way of licensing conditions that refer to a set of Terms and Conditions (T&C). T&C may be slightly varied in light of different business models of different asset managers. If an applicant does not accept the licensing conditions/T&C, its application will be refused.
For details, please see also “Statement on regulatory framework for virtual asset portfolios managers, fund distributors and trading platform operators” and its two appendices on “Regulatory standards for licensed corporations managing virtual asset portfolios” and “Conceptual framework for the potential regulation of virtual asset trading platform operators.
For virtual asset funds, please refer to Q15.
15. What I need to do if I plan to distribute virtual asset funds?
Firms that distribute funds that invest (solely or partially) in virtual assets in Hong Kong are required to be licenced or registered for Type 1 regulated activity (dealing in securities).
Given the significant risks posed to investors, guidance on the expected standards and practices when distributing virtual asset funds is provided in the “Circular to intermediaries on the distribution of virtual asset funds”.
For the management of virtual assets, please refer to Q14.
16. What I need to do if I plan to launch a virtual asset trading platform?
The SFC has set out a conceptual framework for the potential regulation of virtual asset trading platforms with a view to exploring (and forming a view after the exploratory stage) whether such platforms should be granted licences and regulated under the SFC’s existing powers. Trading platforms may approach the SFC if they are interested in being licensed and to demonstrate their commitment to adhering to the SFC’s requirements and the high standards expected of them.
For details, please see also “Statement on regulatory framework for virtual asset portfolios managers, fund distributors and trading platform operators” and its two appendices on “Regulatory standards for licensed corporations managing virtual asset portfolios” and “Conceptual framework for the potential regulation of virtual asset trading platform operators”
For details of the distribution of virtual asset funds and management of virtual asset portfolio, please refer to Q15 and Q16.