Hong Kong Monetary Authority issues circular on the sale and distribution of tokenized products

ChainCatcher news, the Hong Kong Monetary Authority (HKMA) has issued a circular on the sale and distribution of tokenized products, outlining the expected regulatory standards that authorized institutions must adhere to when selling and distributing tokenized products to clients. The HKMA believes it is time to provide guidance on activities related to tokenized products, offering clear regulatory requirements for the banking sector to support continued innovation and realize the benefits that tokenization can bring, while also implementing appropriate safeguards from the perspective of consumer/investor protection.

As a general principle, the existing regulatory provisions regarding the sale and distribution of certain products and consumer/investor protection measures also apply to the sale and distribution of those products in a tokenized form, as their terms, characteristics, and risks (excluding risks arising from tokenization itself) are similar to those of the related products. In addition to general principles, authorized institutions should implement relevant due diligence, disclosure, and risk management consumer/investor protection measures for tokenized products.