Hong Kong's securities watchdog issues regulatory framework to license crypto exchanges

Quick Take

  • Hong Kong’s securities watchdog has issued rules to license crypto exchanges in the region
  • The rules cover custody and KYC guidance, among other issues
  • Notably, the watchdog will license and supervise only those platforms that provide trading in security virtual assets or tokens

Hong Kong Securities and Futures Commission (SFC), the region's securities watchdog, has issued rules for licensing cryptocurrency exchanges. 

Ashley Alder, head of the SFC, announced the news at a forum on Wednesday. Alder said that the rules 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.”

The 61-page regulatory framework covers custody and know-your-customer (KYC) rules, among other issues. "The safe custody of a user’s crypto-assets and cybersecurity are major concerns. There have been many instances of platforms being hacked, with investors suffering substantial losses. Trading rules may not be transparent and fair, and crypto markets are vulnerable to manipulation," said Alder, adding: