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

The Hong Kong Monetary Authority issued a circular on the sale and distribution of tokenized products, which sets out the expected regulatory standards that recognized institutions must comply with when selling and distributing tokenized products to customers. The Monetary Authority believes it is time to provide guidance on tokenized product-related activities, to provide clear regulatory requirements for the banking industry, to support continued innovation and the benefits that tokenization can bring, and to take appropriate safeguards from the perspective of consumer/investor protection. As a general principle, the current regulatory requirements and consumer/investor protection measures for the sale and distribution of a certain product also apply to the sale and distribution of that product in tokenized form, because its terms, characteristics, and risks (excluding risks caused by tokenization itself) are similar to those of related products. In addition to the general principle, recognized institutions should implement consumer/investor protection measures related to due diligence, disclosure, and risk management for tokenized products.

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