Regulators in Hong Kong are set to expand the parameters for monitoring and overseeing the activities of crypto exchanges in the city. While mainland China continues to suppress cryptocurrency trading platforms, Hong Kong has historically been receptive to virtual currency exchange businesses as long as they adhere to laid down rules and regulations.
SFC Keen on Robust Crypto Exchange Regulations
According to Reuters, Hong Kong’s Securities and Futures Commission (SFC) on Tuesday (November 3, 2020), announced plans to regulate all crypto exchanges regardless of whether they list securities tokens. The new expanded regulatory push will replace the opt-in model previously utilized that allowed platforms that did not deal in securities to be exempt from these laws.
For the SFC, the move is part of efforts to prevent crypto exchanges from engaging in illegal practices while offering services to users in Hong Kong. Back in February, BTCManager reported that the city’s financial regulators were looking to tighten their oversight on cryptocurrency exchanges by adopting the Financial Action Task Force (FATF) recommendations.
Apart from anti-money laundering (AML), securities regulation often constitutes a major aspect of crypto laws in several countries. Defining some crypto tokens as securities or utilities remains a major debate within the industry as a whole.
The SFC’s stance on crypto regulations continues to differ from the policies in China. Instead of an outright ban, Hong Kong authorities have worked towards created a regulated environment for cryptocurrency commerce in the city.
In mid-2019, the SFC issued a policy requirement for all crypto exchanges to have full deposit insurance. At the time, the SFC revealed that the measure was necessary to protect customers from the risks associated with hacks and other cyber thefts.
The SFC’s latest crypto directive is coming at a time when China appears to be tightening its noose around crypto exchanges. Numerous reports indicate that Chinese law enforcement is actively investigating principal actors at many major cryptocurrency exchanges.
OKEx withdrawals have been suspended since mid-October with the company’s founder reportedly in police custody. Rumors are also circulating about a senior Huobi executive being in the same predicament.
Indeed, the speculation about Huobi has seen a massive Bitcoin (BTC) outflow from the exchange. The platform has since come out to assure users that all is well with the company and that deposits are safe.