On 1 November 2018, Hong Kong's Securities and Futures Commission ("SFC") issued a statement and circular that expanded its regulatory reach over virtual asset activities. Previously, the SFC's position was that any activities related to virtual assets (e.g. cryptocurrencies, assetbacked tokens, virtual commodities, etc.) would only be subject to the Securities and Futures Ordinance (Cap. 571) if they fell within the definition of "securities" or "futures contracts". However, due to growing concerns over the need to protect investors, the SFC decided to broaden its regulatory oversight to cover all virtual assets, and whether or not they fall within the scope of a "security" or "futures contract". Under the Statement on Regulatory Framework for Virtual Asset Portfolio Managers, Fund Distributors and Trading Operators, and the Circular to Intermediaries – Distribution of Virtual Asset Funds, issued on 1 November 2018, asset managers and fund distributors that invest in virtual assets (whether or not they constitute "securities" or "futures contracts") will be subject to the further supervision of the SFC.

For particulars, see our full IP & TMT Quarterly Review 4/2018.

Originally published December 18, 2018.

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