Hong Kong’s financial regulator, the Securities and Futures Commission (SFC) published a new set of regulations for Bitcoin and cryptocurrency exchanges.
On Nov. 6 Reuters reported the announcement made by the Chief Executive Ashley Alder at a local fintech event.
Clarity on Regulations
The new set of regulations details how crypto exchanges should approach custody and compliance, particularly with Know Your Customer (KYC) and Anti-Money Laundering rules while stating:
“A platform operator should comply with the KYC requirements which are applicable to a licensed corporation. It should take all reasonable steps to establish the true and full identity of each of its clients, and of each client’s financial situation, investment experience and investment objectives.”
In addition, crypto exchanges are required to file a monthly report to the commission. Exchanges must also have an independent auditor while only altering existing products or only offering new products with the approval of the regulator.
Exchanges should not hold funds of more than 2% in hot wallets while all the assets must be insured in case of a hack.
The SFC adds that non-custodial exchanges will not be considered for licensing, stating:
“The SFC will not accept licensing applications from platforms which only provide a direct peer-to-peer marketplace for transactions by investors who typically retain control over their own assets (be they fiat currencies or virtual assets).”
SFC Released Regulations For Crypto Fund Managers
Recently, the Securities and Futures Commission (SFC) released regulations for crypto fund managers. The SFC advised managers to have sufficient human and technical resources for the proper performance of duties as well as to adopt risk management and compliance policies, as well as policies for Anti-Money Laundering and Combating the Financing of Terrorism.
On Nov. 6 cryptonewspoint reported that Hong Kong’s securities and exchange regulator struggles to clear off licensing hurdles, one year after launching a licensing scheme for crypto fund managers. The licenses introduced by Hong Kong’s SFC in October 2018 have apparently led to few approvals.