The SFC has outlined its regulatory approach to the management and distribution of virtual asset funds and virtual asset exchanges.

Key Points:

..Investor protection is paramount and the SFC is taking steps to tighten its supervision of funds that invest in virtual assets and distributors of such funds.

..SFC-licensed asset managers and fund distributors should only sell virtual asset funds to “professional investors” (which include high net-worth individuals) and not to the retail market.

..SFC-licensed asset managers who manage funds that invest in virtual assets will be subject to enhanced regulatory requirements that relate to disclosure, custody, risk management, and regulatory capital.