Hong Kong regulator to create new crypto exchange regulations
The new rules will cover custody and know-your-customer requirements amongst others related to the crypto industry
Hong Kong's financial regulator will publish a regulatory framework for crypto currency exchanges chief executive of the city's Securities and Futures Commission (SFC) Ashley Alder said at a fintech conference in the city.
The new rules will cover custody, know-your-customer requirements, the storage of crypto assets, anti money laundering rules and market manipulation, and other issues specific to the cryptocurrency industry.
Alder first announced initiatives on digital currencies at Hong Kong's 2018 Fintech Week last year including a "sandbox" for crypto exchanges.
This was a way for the regulator and exchanges to discuss ways to oversee digital currencies.
The regulator is taking that work forward, Alder told the conference.
The framework 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,” he said.
"Regulators need to be open to the benefits of innovation, but they should also be ready to tackle the risks to investors which some financial technologies give rise to," he added.
"We have decided to move ahead with this new regulatory framework because it is clearly in the public interest to enable investors to choose to participate in properly regulated virtual asset trading platforms."
Exchanges can apply to be regulated, effective immediately,
Market watchdogs worldwide are debating if they should regulate the cryptocurrency industry and how, as they widen focus beyond mostly protecting investors from scams based on digital assets.
Several of the world’s largest crypto currency exchanges operate in Hong Kong, but Alder said they have escaped regulation because most virtual assets fall outside the definition of a security.