The majority of investors in virtual assets in Hong Kong are driven by a pursuit of short-term gains, view cryptocurrency as an investment trend, and harbor fears of missing out on opportunities.
A key discovery from the “Retail Investor Research 2023” report revealed that 75% of surveyed virtual asset investors in the city prioritize short-term returns in their investment approach.
Moreover, 74% of respondents acknowledged virtual assets as an investment trend, reflecting a widespread belief in their potential for growth and profitability.
An additional 73% expressed anxiety about missing investment opportunities, underscoring the apprehension of being left behind in the rapidly evolving landscape of the market.
Conducted by the Department of Applied Social Sciences at the Hong Kong Polytechnic University, the report delved into the investment behavior of virtual asset investors in Hong Kong.
Common Thinking Patterns Among HK Crypto Investors
The study identified various prevalent cognitive patterns among virtual asset investors, marked by cognitive shortcuts and biases.
These patterns encompassed a reliance on readily available information, known as availability, and an excessive focus on past information, termed anchoring.
Another widespread pattern was overconfidence, where investors tended to overestimate their abilities and believed they could surpass market performance.
These identified patterns, among others, were classified into five types, namely “Following the Trend Type,” “Snake Bite Obedient Type,” “Own Experience Type,” “Intuition Expansion Type,” and “Wishful Thinking Type.”
While the respondents displayed knowledge of financial management, the study also highlighted the necessity for enhancement in their financial management behaviors and attitudes.
The Investment Committee underscored the significance of adopting a comprehensive approach to investment decision-making. It recommended that investors exercise vigilance to safeguard their assets, acquire a thorough understanding of the characteristics and risks linked to investment products, and approach investment decisions with caution. Additionally, the committee emphasized the importance of ongoing review and reflection on one’s own behaviors and attitudes in the realm of investment.
Hong Kong Launches New Regulatory Regime
In June, Hong Kong introduced its updated regulatory framework for cryptocurrencies.
The revised guidelines grant retail investors the opportunity to engage in the trading of virtual assets, expanding access beyond professional investors and traders with a minimum of $1 million in bankable assets.
As a component of these new regulations, the Securities and Futures Commission (SFC) has commenced issuing licenses to cryptocurrency exchanges.
OSL and Hashkey Group have become the inaugural crypto exchanges in Hong Kong to obtain licenses from the SFC. Additionally, they benefit from crypto-to-fiat conversion services provided by ZA Bank, the largest online-only bank in Hong Kong.
The bank enables users on the trading platforms to withdraw their cryptocurrency deposits in US dollars, Hong Kong dollars, and Chinese yuan.
In a recent development, the Hong Kong Virtual Asset Exchange (VAEXC or VAEX) has submitted an application for a virtual asset trading platform license to the Securities and Futures Commission (SFC).
The JPEX scandal, considered potentially the largest financial fraud in Hong Kong’s history, has acted as a catalyst for the Hong Kong government to accelerate the approval process for cryptocurrency products, aiming to enhance compliance within the industry.
