Under the VASP license, investors can purchase non-security-based tokens. If interested in applying for this license, how do I know which tokens are allowed on the shelf? For retail investors, the tokens need to have legal advice that they are non-securities tokens, possibly through the Howey test or other methods. In addition, tokens need to be a component of at least two indices, either a traditional financial asset index, provided by an index services provider such as S&P, Bloomberg or MSCI, or a top 10 cryptocurrency index such as Binance. While the consultation paper does not specify which indices are referenced, it does say that the indices should be provided by established index providers in the traditional financial or cryptocurrency industries.
They give some examples of tokens that may be on the shelf, such as BTC, ETH, DOT, LTC, TRON, and AVAX, Layer 1 tokens, but not the controversial DOGE and SHIB. The spokesperson also noted that stablecoins were not mentioned in the consultation paper and may require separate consultation with the SFC. The spokesperson said that the application of tokens may change quickly and that the Commission will periodically review whether the tokens on the shelf still meet the requirements. If a token becomes a security-based token or loses index status, it may be taken off the shelf and the platform operator will determine the appropriate way to handle the customer. The spokesperson added that NFT was not mentioned in the current consultation.
Under the license, derivatives, futures, and margin trading are prohibited. Platform operators cannot use client assets for pledging or investment purposes. Existing platforms offering these services may be suspended from providing services to Hong Kong users if they apply for a VASP license.