The securities regulator and the central banking institution of Hong Kong have recently updated the region's crypto policy in response to industry inquiries. The authorities have introduced additional measures to protect retail investors and restrict their access to complex crypto products.
Five years ago, Hong Kong adopted an initial approach to regulate crypto assets by limiting various activities in the market to professional investors only. However, the range of investment products offering exposure to virtual assets has significantly expanded since then. As a result, regulators have allowed crypto trading platforms to serve retail investors.
In response to an increasing number of inquiries from industry players who want to expand retail access to virtual asset (VA) products and services, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have released a joint circular updating their policy.
Risks and Regulations
The authorities have highlighted that due to the uneven global regulatory landscape, the risks associated with crypto assets, as identified in 2018, are still valid today. They also acknowledged that unregulated or partially regulated crypto platforms may not adhere to the same standards as traditional financial service providers, thereby posing additional risks.
As a result, the regulatory institutions consider VA-related products to be complex, as retail investors may not understand the associated risks. Consequently, intermediaries distributing such products must comply with the SFC's requirements for selling complex products.
Investor Protection Measures
The SFC and the HKMA believe that additional measures to protect investors are necessary. For instance, they propose allowing the offering of VA-related products that are considered complex only to professional investors. Intermediaries should also assess the knowledge of retail investors before processing a crypto transaction on their behalf. If clients lack sufficient knowledge, intermediaries must provide them with adequate training on the nature and risks of virtual assets.
Furthermore, intermediaries should ensure that their clients have sufficient net worth to bear the potential losses of trading VA-related products.
Hong Kong's Crypto Industry
Hong Kong aims to become a hub for crypto assets and businesses, positioning itself as a global financial center post the Covid-19 pandemic. These revised rules come after the crackdown on JPEX, a crypto exchange, which led to the suspension of its activities and increased regulatory scrutiny across the sector. In October, the SFC and the Hong Kong police formed a special unit to monitor cryptocurrency exchanges.
Do you think Hong Kong regulators will tighten crypto rules further in the future? Share your thoughts in the comments section below.
Frequently Asked Questions
Is it possible to hold a gold ETF within a Roth IRA
You may not have this option with a 401(k), however, you might want to consider other options, like an Individual retirement account (IRA).
Traditional IRAs allow contributions from both the employer and employee. Another way to invest in publicly traded companies is through an Employee Stock Ownership Plan.
An ESOP gives employees tax advantages as they share the stock of the company and the profits it makes. The money invested in the ESOP is then taxed at lower rates than if it were held directly in the hands of the employee.
Also available is an Individual Retirement Annuity. You can make regular payments to your IRA throughout your life, and you will also receive income when you retire. Contributions to IRAs don't have to be taxable
What are the benefits of having a gold IRA?
The best way to invest money for retirement is by putting it into an Individual Retirement Account (IRA). It is tax-deferred until it's withdrawn. You have complete control over how much you take out each year. There are many types to choose from when it comes to IRAs. Some are more suitable for students who wish to save money for college. Others are made for investors seeking higher returns. Roth IRAs let individuals contribute after age 591/2 and pay tax on any earnings at retirement. The earnings earned after they withdraw the funds aren't subject to any tax. This account may be worth considering if you are looking to retire earlier.
An IRA with a gold status is like any other IRA because you can put money into different asset classes. Unlike a regular IRA where you pay taxes on gains, a gold IRA doesn't require you to worry about taxation while you wait to get them. This makes gold IRA accounts a great choice for those who want their money to be invested, not spent.
Another benefit to owning IRA gold is the ability to withdraw automatically. This eliminates the need to constantly make deposits. To avoid missing a payment, direct debits can be set up.
Finally, gold remains one of the best investment options today. Its value is stable because it's not tied with any one country. Even in economic turmoil, gold prices tends to remain relatively stable. As a result, it's often considered a good choice when protecting your savings from inflation.
Should You Invest in Gold for Retirement?
How much money you have saved, and whether or not gold was an option when you first started saving will determine the answer. You can invest in both options if you aren't sure which option is best for you.
Gold is a safe investment and can also offer potential returns. This makes it a worthwhile choice for retirees.
Most investments have fixed returns, but gold's volatility is what makes it unique. Because of this, gold's value can fluctuate over time.
This does not mean you shouldn’t invest in gold. Instead, it just means you should factor the fluctuations into your overall portfolio.
Another advantage to gold is that it can be used as a tangible asset. Gold can be stored more easily than stocks and bonds. It is also easily portable.
You can always access gold as long your place it safe. There are no storage charges for holding physical gold.
Investing in gold can help protect against inflation. As gold prices rise in tandem with other commodities it can be a good hedge against rising cost.
A portion of your savings can be invested in something that doesn't go down in value. Gold usually rises when stocks fall.
You can also sell gold anytime you like by investing in it. Just like stocks, you can liquidate your position whenever you need cash. You don't even have to wait until you retire.
If you do decide to invest in gold, make sure to diversify your holdings. Don't place all your eggs in the same basket.
Do not buy too much at one time. Start small, buying only a few ounces. Then add more as needed.
Don't expect to be rich overnight. It is to create enough wealth that you no longer have to depend on Social Security.
Even though gold is not the best investment, it could be an excellent addition to any retirement plan.
How much are gold IRA fees?
A monthly fee of $6 for an Individual Retirement Account is charged. This fee covers account maintenance fees, as well any investment costs that may be associated with your investments.
If you want to diversify, you may be required to pay extra fees. These fees will vary depending upon the type of IRA chosen. For example, some companies offer free checking accounts but charge monthly fees for IRA accounts.
Many providers also charge annual management fees. These fees range from 0% to 1%. The average rate is.25% each year. These rates can often be waived if a broker, such as TD Ameritrade, is involved.
Should You Open a Precious Metal IRA?
It is essential to be aware of the fact that precious metals do not have insurance coverage before opening an IRA. It is impossible to get back money if you lose your investment. This includes any loss of investments from theft, fire, flood or other circumstances.
It is best to invest in physical gold coins and silver coins to avoid this type loss. These items have been around thousands of years and are irreplaceable. If you were to offer them for sale today, they would likely fetch you more than you paid when you bought them.
If you decide to open an IRA account, choose a reputable company that offers competitive rates and products. It's also wise to consider using a third-party custodian who will keep your assets safe while giving you access to them anytime.
Remember that you will not see any returns unless you are retired if you open an Account. Keep your eyes open for the future.
What are the advantages of a IRA with a gold component?
There are many benefits to a gold IRA. It's an investment vehicle that allows you to diversify your portfolio. You decide how much money is put in each account and when it is withdrawn.
You can also rollover funds from other retirement accounts to a gold IRA. This allows you to easily transition if your retirement is early.
The best thing is that investing in gold IRAs doesn't require any special skills. They're readily available at almost all banks and brokerage firms. Withdrawals are made automatically without having to worry about fees or penalties.
There are also drawbacks. Gold is historically volatile. It is important to understand why you are investing in gold. Is it for growth or safety? Are you looking for growth or insurance? Only once you know, that will you be able to make an informed decision.
If you are planning to keep your Gold IRA indefinitely you will want to purchase more than one ounce. A single ounce isn't enough to cover all of your needs. Depending upon what you plan to do, you could need several ounces.
A small amount is sufficient if you plan to sell your gold. You can even live with just one ounce. These funds won't allow you to purchase anything else.
Should You Buy Gold?
Gold was once considered an investment safe haven during times of economic crisis. Many people are now turning their backs on traditional investments like stocks and bonds, and instead look to precious metals like Gold.
The trend for gold prices has been upward in recent years but they still remain low relative to other commodities like silver and oil.
Experts believe this could change soon. According to them, gold prices could soar if there is another financial crisis.
They also noted that gold is growing in popularity because of its perceived value as well as potential return.
Consider these things if you are thinking of investing in gold.
- Before you start saving money for retirement, think about whether you really need it. You can save for retirement and not invest your savings in gold. The added protection that gold provides when you retire is a good option.
- You should also be aware of what you are getting into before you buy gold. There are many types of gold IRA accounts. Each offer varying degrees of security and flexibility.
- Finally, remember that gold doesn't offer the same level of safety as a bank account. Your gold coins may be lost and you might never get them back.
If you are thinking of buying gold, do your research. Make sure to protect any gold you already own.
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- Do you want to keep your IRA gold at home? It's Not Exactly Legal – WSJ
The History of Gold as an Asset
From the ancient days to the early 20th Century, gold was a common currency. It was widely accepted around the world and enjoyed its purity, divisibility and uniformity. Due to its value, it was also internationally traded. However, since there were no international standards for measuring gold at this point, different weights and measures existed worldwide. For example in England, a pound sterling equals 24 carats. In France, a livre tournois equals 25. Carats of golden. Germany had one mark which equals 28. Carats.
The United States started issuing American coins in the 1860s made of 90% copper and 10% zinc. This resulted in a decline of foreign currency demand and an increase in the price. At this point, the United States minted large amounts of gold coins, causing the price of gold to drop. Because the U.S. government had too much money coming into circulation, they needed to find a way to pay off some debt. They decided to return some of the gold they had left to Europe.
Because most European countries did not trust the U.S. dollar, they started accepting gold as payment. Many European countries began to use paper money and stopped accepting gold as payment after World War I. Since then, the price of gold has increased significantly. Today, although the price fluctuates, gold remains one of the safest investments you can make.
By: Lubomir Tassev
Title: Hong Kong Updates Crypto Policy to Protect Retail Investors
Sourced From: news.bitcoin.com/hong-kong-regulators-restrict-retail-investor-access-to-complex-crypto-products/
Published Date: Mon, 23 Oct 2023 03:30:31 +0000