Hong Kong’s Securities and Futures Commission Issues Warning About the Virtual Asset Futures Exchange

The Hong Kong Securities and Futures Commission issued a warning today, pointing out the risk of trading in virtual asset futures contracts is high and investors are advised to pay attention. At the same time, the operation of the platform for the relevant transactions in Hong Kong may also be illegal. To date, no platform has been licensed by the Securities and Futures Commission or it has been approved to sell or trade-related futures contracts in Hong Kong.

Futures trading in the US about virtual assets, mainly Bitcoin-related contracts, has gradually emerged within the traditional exchange business, including Bakkt under the American Intercontinental Exchange Group (ICE) and the Chicago Board of Trade (CME). These futures contracts regulated by the US Commodity Futures Trading Commission (CFTC) are not subject to the SFC warning.

The SFC pointed out that most futures contracts are unregulated and highly leveraged and are extremely risky. First of all, it is difficult to estimate the relevant assets. Secondly, high leverage also doubles the investment risk. The complexity of the products and the inherent risks may be difficult for ordinary investors to understand. At the same time, there are reports in the market from time to time that these futures exchanges involve manipulating the market and violating activities, such as changing trading rules during the life of the contract, suspending trading or canceling transactions.

As regards the products in these futures platforms, depending on their contractual form, they may be regarded as “futures contracts” in the SFO. Any person who sells or trades, unless exempted, is required to obtain a license or recognition under the above regulations. The SFC has made it clear that in order to protect investors, it is unlikely that a license or recognition will be granted.