October 13, 2023
By Sharan Kaur Phillora
A recent survey by the Investor and Financial Education Council (IFEC) revealed that less than half (47%) of Hong Kong’s retail cryptocurrency investors are familiar with the newly introduced Virtual Asset Trading Platform Regulatory Regime. This legislation, implemented in June, seeks to safeguard the rights of retail investors in digital assets within the region.
Here’s what we know:
Despite the rapid rise in cryptocurrency investments, particularly among the younger demographic of 18-29-year-olds, many remain oblivious to the rules governing the market. A remarkable 25% of Hong Kong adults within this age group invested in cryptocurrencies over the past year, a stark increase from the mere 3% recorded in 2019. This surge is almost triple the average rate across other age demographics.
Interestingly, the dominant investment choices for Hong Kong residents remain traditional. Stocks lead the pack at 96%, with mutual funds and trusts at 24% and bonds at 18%. The primary motivation for the majority venturing into cryptocurrencies? The allure of short-term profits and the growing “fear of missing out”, as the survey of 1,000 respondents aged 18 to 69 unveiled.
Addressing the findings, IFEC’s general manager, Dora Li, emphasized the need for potential investors to comprehend product specifics and associated risks. “Investors should align their choices with their financial objectives and risk appetite,” she stated. Echoing her sentiment, Eric Chui from the PolyU’s Department of Applied Social Sciences, encouraged a thoughtful and informed approach, urging investors to bolster their financial literacy to steer clear of impulsive investment decisions.
This comes at a time when Hong Kong has recently green-lighted retail cryptocurrency trading via licensed platforms. However, the journey hasn’t been without hiccups, as the city witnessed the unfolding of its largest Ponzi scheme to date, involving the $166-million JPEX crypto exchange, casting a shadow on the crypto landscape in the region.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.