On Dec. 11, Hong Kong's Securities and Futures Commission issued a circular cautioning investors regarding the risks associated with bitcoin futures contracts and other cryptocurrency-related investment products and reminding financial services providers of the legal and regulatory requirements when they target customers in Hong Kong.
The SFC noted that exchanges in the U.S. offer bitcoin futures contracts that Hong Kong investors may be able to trade through an intermediary. The SFC reminded participants that dealing in these contracts for investors in Hong Kong, including relaying or routing orders, constitutes a "type 2" regulated activity in Hong Kong and requires a license from the SFC regardless of whether the business is located in Hong Kong. The SFC also stressed that other forms of cryptocurrency-related investment products such as options are available to Hong Kong investors. Failure to obtain a license to offer such products "may be committing a criminal offence," the SFC said.
In related news, Cboe Futures Exchange announced on Dec. 5 that it has received approval in Hong Kong to allow local firms to become CFE Trading Privilege Holders. This means that these firms can now connect directly to the exchange and trade its products, which include futures on bitcoin. CME, which also offers futures on bitcoin, has had a similar authorization from the SFC for several years.
