Hong Kong has just published a new set of rules and guidelines that will govern cryptocurrency exchanges. The publication was done by the country’s Securities and Futures Commission (SFC) and was originally announced by the commission’s chief executive officer (CEO) Ashley Alder.
The new regulation specifics directed at crypto exchanges and how they should run their services from now on. These rules, as expected, include checks and balances to curb the possibility of crime through know your customer (KYC) enforcement, as well as anti-money laundering requirements.
“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.”
Furthermore, the rules compel exchange platforms to make sure all of its funds are fully insured and to only keep a maximum of 2% of funds, in its hot wallets.
In addition, the exchanges must employ third-party entities to run periodic audits of the service as well as compulsorily seek approval from the SFC if it is to change the features of products which already exist, or create new products for its customers.
To ensure more control, the commission has also ruled that it will not license any non-custodial platforms “which only provide a direct peer-to-peer marketplace for transactions.”
Last month, Hong Kong also released rules for crypto fund managers.
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