Hong Kong has shown interest in licensing cryptocurrency exchanges to ease the affairs of crypto holders in the territory. Earlier today, Nov 6, 2019, The Securities and Futures Commission published newly drafted regulatory procedures to get cryptocurrency approval.
This is no doubt the beginning of progress for cryptocurrency in the territory as regulators can now issue licenses to Bitcoin exchanges.
Ashley Alder, head of the SFC, made the announcement at the HK FinTech Week stating that SFC has created a distinct framework for crypto licensing.
The regulatory procedure covers all necessary protections for users and also makes anti-money laundering steps and KYC important for regulators.
The security watchdog also makes safe custody very important. The framework also touches on crypto airdrops, forks, as well as hot and cold wallets. The platforms licensed are to have an insurance policy in place for people so as to not lose funds to hackers.
A position paper by SFC indicated that the regulator met with virtual asset trading platforms. SFC said it concluded that centralized platforms trading security and non-security tokens would be suitable to be regulated under the framework set out in this position paper.
The security regulators therefore said it adopted regulatory standards for virtual asset trading platforms in the same manner with licensed securities brokers and automated trading venues.
“SFC has no power to grant a licence to or supervise a platform that only trades non-security virtual assets or tokens,” the position paper has indicated.
However, the security watchdog will grant licenses to platforms that accept the inclusion of security virtual assets or tokens for trading. The procedure will give regulators the advantage of knowing regulated and non-regulated platforms.
Granting licenses to cryptocurrency exchanges give Bitcoin and other cryptocurrencies the opportunity to be traded within Hong Kong under the set regulatory standard.