Hong Kong’s Securities and Futures Commission (SFC) will reverse a de facto ban on security token offerings and make other changes to make the offerings available to retail investors, a regulator in the regulator’s fintech division said on Thursday.

“We will definitely clarify that security tokens are not complex products, just because they have this tokenized wrapper,” said Elizabeth Wong, Director of Licensing and Head of the SFC fintech unit, who was speaking during a webinar. Wong said the SFC has now taken the view that the appraisal of a token’s risk and asset complexity should be based on the underlying assets, and not on the mere fact that it is “tokenized.”

“For example if you have a tokenized bond, and the bond itself is a plain vanilla bond, then we think that whether the tokenized bond is complex or not should depend on the underlying assets, which is the plain vanilla bond and not the tokenized wrapper,” she said.

The SFC didn’t respond to a request for an interview.

The SFC will be removing the professional investor only requirement, “which means that theoretically security tokens can be offered and traded by retail investors,” she said.

Read more: Hong Kong Regulators Release Stablecoin Rules

She cautioned, however, that any offering is still subject to regulatory requirements and reporting standards that are geared towards offering stability and lowering fraud risk for investors. The reclassification builds on existing securities and anti-money laundering regulations but reverses a cautious approach taken four years ago when it seemed that nefarious attempts to defraud investors were being brought to market and putting retail investors at risk. The SFC implemented a professional investor only designation, as well as other regulations, to cool down the market and warn would-be STO offerings against breaching regulatory guidelines.

The new approach means that existing finance regulation will be good enough to enable retail investors to buy and sell crypto products through their bank or brokerage intermediaries, and the focus will be put on the underlying asset, said Wong.

The Hong Kong approach is an almost 180-degree difference to what is currently happening in the U.S., where companies like Binance and Coinbase are going head-to-head with the U.S. Securities and Exchange Commission over a snarl of clearance processes that many heads of virtual asset trading platforms (VATPs) have said limits fintech innovation.

Hong Kong is racing neck-and-neck with Singapore to offer more crypto product innovations to consumers of the retail and institutional variety in an attempt to re-market Hong Kong as not just a window to China trading, but a place of international finance.

Hong Kong regulators have since June 1 been accepting applications for new licensing of exchanges to enable more trading.  So far, the SFC has not greenlighted any new VATPs.

Read more: Hong Kong's Push to Be a Crypto Haven Isn't So Clear Cut

Hong Kong Monetary Authority CEO Edward Yue has appeared in the media and on public conference circuits since the middle of last year stating that Hong Kong wants to attract international firms that deal in crypto. Meanwhile, banks have begun to explore listing existing crypto ETFs to their retail customers.

HSBC Hong Kong revealed it was offering the three existing crypto ETFs licensed for offering in Hong Kong – CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF and Samsung Bitcoin Futures Active ETF. 

Hang Seng Investment Management company, the largest ETF provider in Hong Kong, announced plans that it will be offering crypto investment products to its clientele after it conducts a review of the available products cleared for offerings in the city. A spokesperson did not respond to a request for comment.

The approach is starting to gain the attention of hedge fund operators and institutional investors keen on tapping into the growing wealth and fintech growth story in Southeast Asia, says Donald Day, COO of new crypto trading platform VDX. He is also a former SFC regulator.

“The SFC seems to now be taking steps to expand the reach of the regulatory framework, and one step is the inclusion of retail investors,” Day said in an interview. “It was always clear that the protection offered by trading platforms licensed under the SFC regime should also and especially be offered to the retail investing public.”

He continued, “This comes with the obvious caveat that any retail investor would need to possess the experience and knowledge to make an informed decision of whether to invest in a digital asset or not, in a very similar way as investing in other asset classes.”

Overall, the city is moving in the right direction, he said. “This will help Hong Kong extend its global lead in becoming the institutional digital asset center of choice,” Day said.