Hong Kong's securities regulator on Tuesday said it will start regulating virtual asset trading business in the SAR next month, and that retail investors may start trading through licensed virtual asset platforms soon. 

The new guidelines include various investor protection measures, such as the safe custody of assets, segregation of client assets, and cybersecurity standards.

Overseas virtual asset trading platforms will only be able to operate or market their services to Hong Kong investors after becoming formally licensed by the Securities and Futures Commission (SFC).

"Any unlicensed activity is a criminal offence, and the SFC will not hesitate to take enforcement action," said Elizabeth Wong, the head of the regulator's fintech unit.

She added that influencers who promote unlicensed trading platforms will also be committing a criminal offence.

The new guidelines will allow some licensed trading platforms to provide services to retail investors, but Wong said no platforms have been approved as of yet.

She added that retail investors may be allowed to trade through SFC-licensed virtual asset trading platforms in the second half of this year, at the earliest.

The regulator said that it will implement robust measures to protect retail investors, such as setting up admission criteria requirements for platforms seeking SFC approval.

"Only large-cap virtual assets of high liquidity will be allowed to be admitted for trading by retail investors," Wong said.

The regulator said it will continue working with the Investor and Financial Education Council to warn people about the risks of trading on unregulated platforms.