Breaking the SFC and HKMA regulations on distribution of crypto asset funds
The SFC and the Hong Kong Monetary Authority currently impose strict requirements on intermediaries distributing crypto-asset-related products (VA-related products), regardless of regulation, including ensuring the suitability of virtual-asset related products for retail investors. asks you to follow. Solicitation or Recommendation. In addition to that, there are further investor protection measures that need to be taken, such as sales restrictions, VA knowledge tests, and risk disclosure requirements.
These new investor protection measures related to crypto assets are not limited to Hong Kong. In the Middle East, the Virtual Assets Regulatory Authority has also developed a comprehensive framework for the Emirate of Dubai. Regulators have launched a number of tests, including examining the fund’s constituent stocks and determining its direct exposure to virtual assets.
Complying with these new guidelines is not without its challenges. Financial institutions have warned that direct or indirect exposure to virtual assets through a fund may be difficult to identify. Additionally, businesses must find ways to automate existing manual processes so they can effectively communicate with retail customers before a transaction is completed. Finally, if these regulations continue to spread globally, companies will need to have the infrastructure in place to navigate different regulatory regimes that meet their specific requirements at scale.
To help intermediaries comply with the Joint Notice, Bloomberg offers a data licensing regulatory solution that provides metrics to identify VA-related products.
VA exposure occurs when a product’s primary investment objective or strategy focuses on investing in virtual assets, when its value is primarily derived from virtual assets, or when investment results closely match the performance of virtual assets. is flagged if it is tracked or duplicated.
The solution includes a variety of indicators created to assist intermediaries in assessing whether a virtual asset qualifies as a complex product. In line with regulatory obligations, certain virtual asset-related products are restricted to professional investors only, and this solution explicitly highlights these products and ensures compliance with established guidelines.
It also includes a sophisticated mechanism for performing up to three levels of look-through on the underlying holding funds. This feature is particularly valuable for clients seeking to identify or comply with regulations in jurisdictions that require such transparency. By leveraging relevant attributes and metrics built into the solution, clients can confidently navigate the complexities of regulatory compliance.
In summary, Bloomberg’s data-driven solutions serve as a comprehensive tool for intermediaries to streamline the identification of direct exposure to virtual assets, assess product complexity, and ensure compliance with ever-increasing jurisdictional requirements. improve operational efficiency in the face of evolving regulations. landscape.
To learn more about Bloomberg’s Investor Protection Data Solutions, request a demo here.
