- Stablecoin regulation will begin in Hong Kong in June of this year.
- SFC recommends operators create a compensation mechanism that it must approve to offset risks.
The Securities and Futures Commission (SFC) of Hong Kong is seeking public input on its recently proposed licensing scheme for cryptocurrency exchanges. That is slated to go into effect in June 2023. On Feb. 20, the SFC announced the consultation process and detailed a new licensing framework for the industry. That suggests all centralized cryptocurrency trading platforms operating in Hong Kong be require to hold a license from the regulatory agency.
Although, Stablecoin regulation will begin in Hong Kong in June of this year as well. In the consultation paper published on Monday, proposes regulations are outlined, including how to evaluate clients’ risk profiles. And also set restrictions to make sure their exposure is reasonable.
Instead of a fixed limit for assets held in cold storage, the SFC recommends operators create a compensation mechanism. That must approve to offset risks. Operators will need to regularly assess the total amount of customer assets retained and modify the arrangement as necessary.
Additionally, the SFC of Hong Kong also plans to release and maintain a current list of approved cryptocurrency exchanges . And also service providers to let the public know about the various businesses’ registration statuses. The SFC permitted some regulated derivative instruments related to cryptocurrencies. That traded on traditional exchanges to individual investors in January 2022.
