How Hong Kong’s Guidelines Have Resulted In Increased Cryptocurrency Investment

According to reports, Michael Wong, a partner at De Jie Law Firm, stated that since the issuance of guidelines by the Hong Kong Securities and Futures Commission (SFC) in 2019, 10 fund managers in Hong Kong have upgraded their licenses to manage cryptocurrencies. With the necessary Class 9 (asset management) license, fund managers will be able to invest 10% of their total asset value under management in the digital asset sector.

About 10 fund managers in Hong Kong have obtained Category 9 (Asset Management) licenses

In a report released by Hong Kong Securities and Futures Commission (SFC) in 2019, guidelines were set that resulted in an increase in the number of fund managers in Hong Kong who sought to upgrade their licenses. Michael Wong, a partner at De Jie Law Firm stated that since these guidelines were issued, ten fund managers have upgraded their licenses to manage cryptocurrencies. With the necessary Class 9 (asset management) license, fund managers may now be able to allocate up to 10% of their total asset value under management in the digital asset sector.

A Brief Overview of Cryptocurrency

Cryptocurrency refers to a digital asset that is designed to work as a medium of exchange that utilizes strong cryptography to secure financial transactions and to control the creation of new units. The most well-known cryptocurrency is Bitcoin, which was created in 2009 by an individual or group using the pseudonym Satoshi Nakamoto. In recent years, the cryptocurrency sector has experienced unprecedented growth, as more and more individuals and investors look for ways to invest in this new asset class.

Hong Kong’s Cryptocurrency Guidelines

Hong Kong’s Securities and Futures Commission is responsible for regulating all financial activities in Hong Kong, including the buying and selling of cryptocurrency. In 2019, the SFC established guidelines for cryptocurrency trading that sought to protect investors and help monitor the sector. These guidelines required all cryptocurrency trading platforms to obtain a license from the SFC, which would be subject to their oversight. As a result, all cryptocurrency traders in Hong Kong must comply with these regulations or risk facing penalties.

Upgrading Licenses

Ten fund managers in Hong Kong have upgraded their licenses to manage cryptocurrencies since the issuance of the SFC guidelines. These fund managers are now required to obtain a Class 9 license, which is an asset management license that allows fund managers to allocate up to 10% of their total assets under management in the digital asset sector. This move indicates that these fund managers believe that investing in cryptocurrency is likely to lead to favorable returns in the future.

Why Upgrade Licenses?

As previously mentioned, cryptocurrency is a new asset class that has experienced unprecedented growth in recent years. Investing in cryptocurrency is still considered by many to be a high-risk venture, and as such, it is important for investors to mitigate risk where possible. By upgrading their licenses and obtaining a Class 9 license, fund managers are able to demonstrate their commitment to compliance and provide reassurance to their investors that they have undertaken appropriate due diligence when it comes to investing in this new asset class.

Benefits of Investing in Cryptocurrency

There are a number of benefits to investing in cryptocurrency. For one, cryptocurrencies offer investors a level of decentralization that is not found in traditional investments. Additionally, the digital nature of cryptocurrency makes it easier to transfer funds across borders, reducing the need for complex transfer networks and enabling faster payments to be made. Cryptocurrencies are also considered to be more secure than traditional investments, as each transaction is encrypted using strong cryptography, making it much harder for hackers to steal funds.

Conclusion

Since the issuance of guidelines by the Hong Kong Securities and Futures Commission (SFC) in 2019, the number of fund managers upgrading their licenses to manage cryptocurrencies has increased. This move indicates that these fund managers believe that investing in cryptocurrency is likely to lead to favorable returns in the future. Investment in this new asset class, while still deemed risky by some, may provide investors with a level of decentralization, security, and ease of transfer that is not available with traditional investments.

FAQ

1. What is a Class 9 license?
A Class 9 license is an asset management license that allows fund managers in Hong Kong to allocate up to 10% of their total assets under management in the digital asset sector.
2. Why should I invest in cryptocurrency?
Investing in cryptocurrency offers the potential for decentralized investments, fast and secure transfers, as well as greater security.
3. What are some of the risks of investing in cryptocurrency?
Investing in cryptocurrency is still a high-risk venture and there is always a possibility that an investor may incur significant losses.