Low Awareness of Regulatory Regime
Less than half of retail crypto investors in Hong Kong are aware of the Virtual Asset Trading Platform Regulatory Regime, which was implemented in June to protect the interests of retail investors in digital assets. According to a report by the Investor and Financial Education Council (IFEC) of Hong Kong, only 47% of investors surveyed had knowledge of the legislation.
Surprising Increase in Crypto Investment
The IFEC survey also revealed that nearly 25% of Hong Kong adults aged 18 to 29 have invested in cryptocurrencies in the past year. This is three times the demographic average and a significant increase compared to 2019, when only 3% of respondents in this age group reported investing in crypto.
Investment Preferences
Despite the growing adoption of cryptocurrencies, the majority of Hong Kong investors still prefer traditional investment options. Stocks were the top choice for 96% of respondents, followed by mutual funds and trusts (24%), and bonds (18%).
Short-Term Profits and FOMO
The survey found that around 75% of respondents cited "short-term profits" and "fear of missing out" as the primary reasons for investing in cryptocurrencies. This suggests that many investors are looking for quick gains rather than long-term investment strategies.
Importance of Financial Literacy
The IFEC general manager, Dora Li, emphasized the importance of understanding product characteristics and risks before investing in cryptocurrencies. She advised investors to align their choices with their financial goals and risk tolerance levels. Eric Chui, head of the Department of Applied Social Sciences at PolyU, added that virtual asset investors should approach their investments more deliberately, build their financial literacy, and gather high-quality market information to avoid irrational behavior and biases.
Mixed Results for Legalized Crypto Trading
In June, Hong Kong legalized retail crypto trading for licensed exchanges. However, the move has had mixed results. During this time, the region experienced the largest Ponzi scheme in Hong Kong history, involving the $166 million JPEX crypto exchange scandal.
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