Hong Kong’s SFC Mandates 50% Insurance Coverage for Licensed Crypto Exchanges
In a move to enhance the security and trustworthiness of licensed crypto exchanges in Hong Kong, the Securities and Futures Commission (SFC) has recently introduced a new regulation. This regulation mandates that all licensed crypto exchanges must insure at least 50% of their customers’ assets. The aim is to provide protection in the event of a security breach or insolvency.
Leading the way in compliance with this new regulation are OSL Exchange and HashKey Exchange, two prominent licensed virtual asset trading platforms in Hong Kong.
OSL Exchange’s Extensive Insurance Coverage
OSL Exchange has entered into a two-year partnership with Canopius, a syndicate of underwriter Lloyds of London, to secure an insurance policy that covers an impressive 95% of its users’ assets. This level of coverage significantly surpasses the minimum requirement set by the SFC. This move by OSL Exchange demonstrates their commitment to customer asset protection and sets a high standard for other exchanges to follow.
HashKey Exchange’s Insurance Agreement
Similarly, HashKey Exchange has signed an agreement with OneInfinity to provide insurance coverage of up to $400 million worth of users’ assets. This coverage may potentially be expanded in the future to include incidents such as server downtime and data back-up issues. HashKey Exchange’s proactive approach to securing extensive insurance coverage showcases their dedication to customer trust and safety.
Broader Efforts to Regulate the Cryptocurrency Industry in Hong Kong
These insurance measures are part of Hong Kong’s broader efforts to regulate the cryptocurrency industry. Since allowing crypto trading for retail investors in August last year, only OSL and HashKey have received virtual asset trading licenses. Currently, thirteen entities are in the process of applying for these licenses. These licenses require applicants to undergo comprehensive due diligence checks, including traditional financial audits that go beyond proof-of-reserves.
The introduction of the insurance mandate not only protects investors but also raises operational standards among crypto exchanges. It sets a precedent that may influence other global financial centers to adopt similar protective measures, thereby elevating the safety standards of the global cryptocurrency market.
By implementing this regulation, the SFC aims to instill confidence in the crypto industry and provide customers with peace of mind knowing that their assets are protected.
Disclaimer: This article is for informational purposes only and is not intended as financial or investment advice.