Hong Kong’s securities watchdog, the Securities and Futures Commission (SFC) appears to be poised to lay down a regulatory framework for cryptocurrency exchange applications in the region.
According to Ashley Alder, head of the SFC, the new regulatory framework will focus on know your customer (KYC) and custody requirements for cryptocurrency exchanges. Such a move could pave the way for the emergence of formally legalized cryptocurrency exchange listings in the city. As a practice and the latest cryptocurrency news shows, for safe development and use, digital currency needs regulation and rules.
"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." - said Alder.
The new regulatory framework allows the SFC to grant a license to exchange operators that wish to opt-in to regulation. In other words, it is not a must for crypto exchanges in the city to acquire a license to operate. Alder explained that the reason for choosing an opt-in solution because the existing legislation was not designed with the crypto world in mind. He believes that markets can wait until new legislation covers the entire virtual assets sector, although no timeline is provided.