Fun

Hong Kong Regulator to Treat Some Crypto Exchanges Like Brokers

News Feed - 2019-11-06 08:11:14

Hong Kong’s securities watchdog is to treat cryptocurrency trading platforms like traditional brokers if they offer security tokens, according to its second round of regulatory guidance for the industry.


The Securities and Futures Commission (SFC) released its position paper on virtual asset exchanges Wednesday, announcing a new licensing scheme that it said is not dissimilar from the one applied to Hong Kong’s security brokers and automated trading venues.


Any virtual asset firm trading at least one security token falls under the regulator’s purview. Applications for peer-to-peer (P2P) exchanges – such as decentralized exchanges (DEX) or non-custodial trade platforms – will not be reviewed by the SFC.


Under the new licensing conditions, regulated crypto exchanges can only offer products to “professional investors” as defined by the SFC. Firms may also only alter products or services following approval by the regulator and must have an existing relationship with an independent auditing firm, filing annual reports on exchange activities. Exchanges must further file monthly reports to the commission.


Hot wallets – crypto storage with live connections to the internet – may not hold more than 2 percent of an exchange’s total funds. While exchanges are mandated to have insurance for all assets in the event of a breach or hack, the SFC states.


Anti-money laundering (AML) and know-your-customer (KYC) procedures are cited as a chief concern, with the SFC saying exchanges must take 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.”


Upon the granting of a license, firms enter into the SFC Regulatory Sandbox which the regulator says brings more exacting reporting and monitoring standards.


The regulator also issued a warning Wednesday to providers of cryptocurrency-based futures products targeting Hong Kong citizens without the proper paperwork. The SFC said it “has not licensed or authorised any person in Hong Kong to offer or trade virtual asset futures contracts” to date and remains “unlikely to grant a licence or authorisation to carry on a business in such contracts.”


Crypto derivative providers like BitMEX and OKEx already restrict access to their products in Hong Kong.


Passed in November 2018 and updated this October, the SFC’s first crypto licensing scheme, concerning funds that invest 10 percent or more of their portfolios in crypto, has only given the green light to one fund in the past year.


Hong Kong image via Shutterstock

News Feed

$200,000 Bitcoin In 2025? $791 Billion Asset Manager Calls It ‘Conservative’
Este artículo también está disponible en español. Bernstein Research, the esteemed research arm of global asset manager AllianceBernstein, is projecting that Bitcoin will
Bitcoin, Ethereum Technical Analysis: BTC, ETH Move Lower on Thursday, After Hawkish Fed Rate Hike
Bitcoin, Ethereum Technical Analysis: BTC, ETH Move Lower on Thursday, After Hawkish Fed Rate Hike Bitcoin fell towards the $20,000 mark on Thursday, after the U.S. Federal Reserve
Biggest Movers: SOL Moves Past LUNA, as EOS and FIL Lead Monday’s Gainers
Biggest Movers: SOL Moves Past LUNA, as EOS and FIL Lead Monday"s Gainers Solana reclaimed the eighth position in the crypto top ten, as ADA and DOT were both over 10% higher to st
Reef Launches NFT Team Focused on Graffiti and Electronic Music Artists
Reef Launches NFT Team Focused on Graffiti and Electronic Music Artists press release PRESS RELEASE. Reef, a layer 1 Substrate based blockchain for DeFi, NFTs, and gaming, announced
Yellen Says US ‘Not Willing to Allow Contagious Bank Runs,’ Calls OPEC Oil Production Cut ‘Unconstructive’
Yellen Says US ‘Not Willing to Allow Contagious Bank Runs,’ Calls OPEC Oil Production Cut "Unconstructive" Roughly 26 days ago and in the following days, the U.S. witnessed two
New Crypto Rules in Thailand Could Require Traders to Show Income Before Opening Trading Accounts
New Crypto Rules in Thailand Could Require Traders to Show Income Before Opening Trading Accounts Thailand seeks to introduce a new set of rules for retail crypt
Value Locked in Defi Climbs 13% Higher Since Last Week’s Low, SOL Price Jumps 25%, AVAX TVL Spikes
Value Locked in Defi Climbs 13% Higher Since Last Week"s Low, SOL Price Jumps 25%, AVAX TVL Spikes The total value locked (TVL) in decentralized finance (defi) has jumped back abov
US Unveils Bill Giving Treasury Secretary ‘Unchecked and Unilateral Power’ to Ban Crypto Transactions, Advocate Warns
US Unveils Bill Giving Treasury Secretary "Unchecked and Unilateral Power" to Ban Crypto Transactions, Advocate Warns A new bill introduced in the U.S. has a provision that “
Apple is future-proofing iMessage with post-quantum cryptography
Tristan Greene6 hours agoApple is future-proofing iMessage with post-quantum cryptographyQuantum computers pose an outsized threat to status quo cryptographic solutions.1096 Total views4 Total sharesListen to article 0:0
‘Self-Custody Should Mean the Ownership of Everything About You’ Says Sharering’s Tim Bos
"Self-Custody Should Mean the Ownership of Everything About You" Says Sharering"s Tim Bos According to Sharering, a blockchain-based platform enabling the creation and use of ̶
ECB Calls for Urgent Regulation of Stablecoins and Defi, Won’t Rule Out Bitcoin Mining Ban
ECB Calls for Urgent Regulation of Stablecoins and Defi, Won’t Rule Out Bitcoin Mining Ban A new report by the European Central Bank (ECB), presented as a “deep dive into
Ethereum Pulls Back To 20DMA After $2,700 Rejection: Testing Strength At Key Support
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu