The Rise of Cryptocurrency Investment: How Hong Kong Fund Managers are Upgrading their Licenses
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
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
As the world becomes more technologically advanced, the way we invest and store our assets has been changing. Cryptocurrency, a digital currency that uses cryptography to secure transactions and control the creation of new units, has been gaining popularity as a new form of investment. Recently, fund managers in Hong Kong have recognized the potential of this currency, with many upgrading their licenses to invest in the digital asset sector. In this article, we will explore the guidelines issued by the Hong Kong Securities and Futures Commission (SFC) in 2019, and how it has contributed to the upgrading of licenses by fund managers in Hong Kong.
The SFC’s Guidelines for Cryptocurrency Investment
In November 2019, the Hong Kong SFC issued new guidelines for fund managers who intend to invest in cryptocurrencies. These guidelines were implemented to ensure that fund managers are able to properly manage the risks associated with investing in these digital assets.
One of the key requirements of the guidelines is that fund managers must have a Class 9 asset management license. This license enables fund managers to invest up to 10% of their total asset value under management in the digital asset sector. This license is specifically designed for fund managers who want to invest in unlisted securities, which includes cryptocurrencies as well.
Another requirement is that the fund managers must have adequate risk management policies and procedures in place. This includes proper due diligence on the digital assets, as well as proper valuation and assessment of the risks involved in investing in these assets. The SFC has emphasized on the importance of proper risk management policies to protect investors and to ensure that the fund managers are able to respond effectively to any potential risks.
The Upgrading of Licenses by Fund Managers
According to Michael Wong, a partner at De Jie Law Firm, 10 fund managers in Hong Kong have upgraded their licenses to manage cryptocurrencies since the issuance of the SFC guidelines in 2019. These fund managers recognize the potential of cryptocurrencies as a new investment opportunity and are interested in exploring the digital asset sector.
By upgrading their licenses to have a Class 9 asset management license, these fund managers are able to diversify their investment portfolios and to potentially increase their returns. Cryptocurrencies have been known to have high volatility, but they also have the potential for high returns. With adequate risk management policies and procedures in place, these fund managers are able to invest in cryptocurrencies responsibly and efficiently.
The Potential of Cryptocurrency Investment
The rise of cryptocurrency investment has been gaining traction in recent years. With more fund managers recognizing the potential of these digital assets, it is likely that more investors will be interested in exploring this sector. Cryptocurrencies are decentralized, meaning that they are not under the control of any central authority. This allows for more transparency in transactions and reduces the costs associated with traditional financial transactions.
Cryptocurrencies are also not limited to geographical boundaries, making it easier for investors to diversify their portfolios globally. With proper risk management policies and procedures in place, fund managers can potentially benefit from the high returns of cryptocurrencies while minimizing the risks involved.
Conclusion
The guidelines issued by the Hong Kong SFC in 2019 have been instrumental in upgrading the licenses of fund managers in Hong Kong. These guidelines emphasize on the importance of proper risk management policies and procedures to protect investors and to ensure that fund managers are able to respond effectively to any potential risks.
The rise of cryptocurrency investment presents new opportunities for fund managers to diversify their portfolios and potentially increase their returns. With more fund managers upgrading their licenses to manage cryptocurrencies, it is likely that this digital asset sector will continue to grow in the coming years.
FAQs
1. What are cryptocurrencies?
Cryptocurrencies are digital currencies that employ cryptography to secure financial transactions and validate the transfer of assets. They operate independently of central bank regulations and are decentralized, meaning that they are not under the control of any central authority.
2. Why are fund managers upgrading their licenses to invest in cryptocurrencies?
Fund managers are recognizing the potential of cryptocurrencies as a new investment opportunity which could provide high returns. By upgrading their licenses, they can explore the digital asset sector and potentially diversify their investment portfolios.
3. What are the risks associated with investing in cryptocurrencies?
Cryptocurrencies are highly volatile and their values can fluctuate dramatically in a short period of time. Due to their decentralized nature, they are also subject to hacking and fraud. However, with proper risk management policies and procedures in place, fund managers can minimize the risks involved in investing in these digital assets.
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