Hong Kong Unveils New Rules for Cryptocurrency Exchanges
Saturday, 11 09 2019, Category: Technology, Country: Asia
Today, Hong Kong’s financial regulator — the Securities and Futures Commission (SFC) — has published a new set of regulations for Bitcoin (BTC) and cryptocurrency exchanges. The initial announcement, reported by Reuters, was made by Chief Executive Ashley Alder at a local fintech event on Nov. 6.
The new requirements detail how exchanges much approach custody and compliance, particularly with regards to Know Your Customer (KYC) and Anti-Money Laundering rules. Specifically:
“A platform operator should comply with the KYC requirements which are applicable to a licensed corporation. It should take all reasonable steps to establish the true and full identity of each of its clients, and of each client’s financial situation, investment experience and investment objectives.”
Moreover, cryptocurrency exchanges can only offer products to “professional investors” and will be required to file a monthly report to the Commission. Additionally, exchanges must have an independent auditor and only alter existing products or offer new products with regulator approval.
Exchanges must also not hold more than 2% of total funds in hot wallets and all assets have to be insured in the event of a hack.