Virtual Asset Platform Compliance Pitfalls: Saxo Financial Fined 4 Million Yuan as a Warning

【CryptoWorld】The Hong Kong Securities and Futures Commission recently announced an important enforcement action against a virtual asset platform. Saxo Financial was fined 4 million HKD for violating regulations by selling virtual asset funds and related products on its online trading platform.

The details are as follows: from November 2018 to November 2022, Saxo Financial distributed some virtual asset products on its online platform. The issue is that, according to the relevant circulars from the SFC, these products should only be sold to professional investors, but Saxo Financial allowed ordinary retail clients to participate in the trading.

How serious was the violation? The SFC’s investigation found that during this period, Saxo Financial executed 1,446 virtual asset transactions. Participants included 6 individual professional investors and 130 retail clients, involving 32 virtual asset products. More notably, all these products are classified as high-risk, complex products, including 21 transactions involving exchange-traded derivatives of virtual assets.

The most critical violation point is: before allowing clients to trade these products, Saxo Financial neither assessed whether clients truly understood the investment risks of virtual assets nor provided sufficient information disclosure, nor did it issue necessary risk warnings regarding virtual assets. This directly violated the clear compliance guidelines in the SFC’s circular.

This case provides a clear lesson for industry practitioners: in virtual asset business, client classification, information disclosure, and risk warnings are all indispensable. Especially when dealing with complex derivative products, compliance procedures must be strictly followed. Otherwise, even if the trading volume doesn’t seem particularly large, the platform could face fines in the millions and reputational risks.