A new rules has been published on Wednesday by Hong Kong’s financial regulator that would allow cryptocurrency exchanges to receive an operating license, a step intended to improve regulation and standards and help prevent fraud.
Market watchdogs have been debating whether and how they should regulate the cryptocurrency industry since Facebook’s plans to launch its Libra digital currency caused many of them to broaden their focus on digital assets beyond investor protection concerns.
Market watchdogs have been discussing whether and how they should regulate the cryptomoneda industry since Facebook plans to launch their digital currency Libra led many of them to expand their focus on digital assets beyond the concerns about investor protection.
Hong Kong hosts dozens of exchanges of cryptocurrency , also called virtual asset trading platforms, including some of the largest in the world.
Ashley Alder, Chief Executive Officer of the Hong Kong Securities and Exchange Commission (SFC), said that these exchanges had largely escaped the regulation so far, as most of the virtual assets traded on their platforms were not technically values.
The new rules, under which exchanges can apply to be regulated from Wednesday, draw on the standards the SFC expects for conventional securities brokers.
The new rules, can be applied to regulate as of Wednesday, take advantage of the standards that SFC expects for conventional securities brokers.
They stipulate that an exchange that wants to be licensed must provide services to professional investors only, have an insurance policy to protect clients in case assets are lost or stolen, and use an external market surveillance mechanism.
Cryptocurrency exchanges do not need an SFC license to operate provided they do not trade any products defined as a security. Bitcoin for example is not a security, Alder said.