Hong Kong’s securities watchdog issues regulatory framework to license crypto exchanges

The Block reports, “Hong Kong Securities and Futures Commission (SFC), the country’s securities watchdog, has issued rules for licensing cryptocurrency exchanges. 

“Ashley Alder, head of the SFC, announced the news at a forum on Wednesday. Alder said that the rules will ‘enable virtual asset trading platforms to be regulated by the SFC, a major development which builds on a way forward I outlined at the same time last year.’

“The 61-page regulatory framework covers custody and know-your-customer (KYC) rules, among other issues. ‘The safe custody of a user’s crypto-assets and cybersecurity are major concerns. There have been many instances of platforms being hacked, with investors suffering substantial losses. Trading rules may not be transparent and fair, and crypto markets are vulnerable to manipulation,’ said Alder, adding:

“‘Our new regulatory framework covers all of the key investor protection concerns, including the safe custody of assets, know-your-client requirements, anti-money laundering and market manipulation. And it also zeros in on many of the new concepts we are getting used to, such as hot and cold wallets, forks, airdrops and the like. We will also set out the criteria for platforms to decide on the inclusion of a new virtual asset for trading.’

“Notably, the framework applies to ‘a centralized virtual asset trading platform operating in Hong Kong which trades virtual assets including at least one security token.’ The SFC said it has no power to grant a license to or supervise a platform that only trades non-security virtual assets or tokens.  ‘Only those platforms which enable clients to trade security virtual assets or tokens fall within the SFC’s regulatory remit,’ it said…”

Continue to see the full report at The Block.