A recent report by the Investor and Financial Education Council (IFEC) of Hong Kong reveals that only 47% of retail crypto investors in the region are aware of the Virtual Asset Trading Platform Regulatory Regime.
This legislation, which was implemented in June, aims to safeguard the interests of retail investors in digital assets. The IFEC’s survey also shed light on the growing trend of cryptocurrency investments among young adults.
According to the survey, nearly a quarter of Hong Kong adults between the ages of 18 and 29 have dabbled in digital currencies over the past year. It represents a substantial increase from 2019, when only 3% of respondents in the same demographic reported investing in digital assets.
Despite this surge in crypto investment, traditional financial instruments remain the top choice for Hong Kongers, with 96% preferring stocks, followed by mutual funds and trusts (24%) and bonds (18%).
As cited by approximately three-quarters of the respondents, the primary motivation behind investing in cryptocurrencies is the pursuit of “short-term profits” and the “fear of missing out.”
Dora Li, the general manager of IFEC, emphasized the importance of understanding product characteristics and related risks before making investment decisions to align with financial goals and risk tolerance.
Eric Chui, the head of the Department of Applied Social Sciences at PolyU, stressed the need for more deliberate and rational thinking among virtual asset investors. He encouraged them to enhance their financial literacy and gather high-quality market information to avoid irrational investment behavior and biases.
Hong Kong’s OTC Crypto Market Gains Ground
Last week, Chainalysis reported that Hong Kong’s active over-the-counter (OTC) crypto market saw $64 billion in trading volume during the previous year. This figure is in close competition with China’s $86.4 billion despite Hong Kong’s considerably smaller population.
The data reflects a degree of crypto tolerance by Beijing, as it maintains strict prohibitions on cryptocurrencies. Chainalysis speculates that Hong Kong’s burgeoning status as a crypto hub may signal a potential shift in the Chinese government’s stance on digital assets.
Hong Kong’s strength in large institutional digital assets transactions is also notable, with nearly 47% of its annual trades being institutional transactions exceeding $10 million.
While retail trades under $10,000 accounted for just 4% of the city’s volume, slightly below the global average of 4.7%. In contrast, South Korea heavily leans on retail trading on centralized exchanges, with “professional” traders making up 40% of the volume.
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