CRYPTOCURRENCY exchanges operating in Hong Kong will have to be licensed by the city’s markets regulator and will only be allowed to provide services to professional investors, according to government proposals published Friday.

Governments and financial regulators around the world are still assessing whether and how they should regulate the crypto industry. Investor protection and preventing money laundering are particular concerns.

Cryptocurrencies such as Bitcoin and ether have been on a roller-coaster ride last week which has raised further questions about their potential as mainstream investments.

Dozens of cryptocurrency exchanges operate in Hong Kong, including some of the world’s largest. The city currently has an “opt in” approach under which exchanges can apply to be licensed by markets watchdog the Securities and Futures Commission, but do not have to.

Hong Kong’s Financial Services and the Treasury Bureau (FSTB) has been consulting the market on changes to those rules since last year.

The FSTB said Friday in its consultation conclusions all virtual asset (crypto currency) exchanges should be licensed if they wished to operate in Hong Kong.

It also said “confining the services of a virtual asset exchange to professional investors.... is appropriate at least for the initial stage of the licensing regime.”

According to Hong Kong law, an individual must have a portfolio of HK$8 million (US$1.03 million) to count as a professional investor. (SD-Agencies)