Hong Kong has introduced new measures that seek to officially regulate the crypto exchanges operating within the city. The Securities and Futures Commission (SFC) in Hong Kong made public a draft regulatory regime on Nov 6, 2019, which will see the securities regulator grant operating licenses to crypto exchange firms, the Medium reports.
Last year, the securities regulator launched a regulatory sandbox but exempted the fintech firms to allow for enhanced innovation. During the Fintech week in Hong Kong, Ashley Alder, the head of SFC revealed that the regulator has framed the regulation guidelines that will guide the crypto exchanges within the city.
According to Alder, the new regulations will cover all crucial investor concerns comprising of proper storage of the digital assets, KYC aspects, anti-money laundering and financing of criminal activities as well as market manipulation. The watchdog’s head explained that these guidelines have been absent in the conventional financial market spheres.
According to the new guidelines, the licensed crypto exchange firms will need to have an insurance to cover against any theft or loss of virtual assets.
Alder stressed that cryptos are now moving to the mainstream financial markets highlighting the popularity of stablecoins which he said have the capacity to be adopted faster in the global financial system. He stated that the majority of central banks and other policy makers have concerns about the stablecoins and the new regulation guidelines will help tackle some of the raised concerns.
The fresh SFC regulatory guidelines will allow the crypto exchanges to decide whether to be regulated or not. Alder explained that it will not be mandatory for the exchanges to apply for operation license within the city.
Following the publication of the new regulations, OSL crypto exchange which is a subsidiary of BC Group announced that it had applied for an operating license claiming to be the first platform to do so in Hong Kong, Reuters report.
OSL CEO, Wayne Trench, congratulated the SFC for the new guidelines stressing that they will help in streamlining the industry.
It is expected that other exchanges will apply for license to enhance their reputation and credibility among crypto traders in the city.