February 1, 2024
By Sharan Kaur Phillora
In a move to boost investor confidence, Hong Kong’s Securities and Futures Commission (SFC) has mandated a minimum of 50% insurance coverage for all licensed cryptocurrency exchanges. This directive aims to fortify the security and reliability of these platforms against potential risks like security breaches or insolvency.
Leading the compliance forefront, OSL Exchange and HashKey Exchange have already secured extensive insurance policies, surpassing the SFC’s minimum requirements.
Here’s what we know:
Leading the charge in compliance, OSL Exchange and HashKey Exchange have not only met but significantly exceeded the SFC’s requirements by securing comprehensive insurance policies for their customer assets. “Our partnership with Canopius, a syndicate of Lloyd’s of London, allows us to insure 95% of our customer assets, far beyond the SFC’s mandate,” stated an OSL spokesperson, highlighting their commitment to customer security.
Similarly, HashKey Exchange has taken robust measures by partnering with OneInfinity, insuring up to $400 million worth of customer assets. “This insurance coverage, which may extend to include server downtime and data backup issues, underscores our dedication to providing a secure trading environment,” remarked a representative from HashKey.
These proactive steps are part of Hong Kong’s wider strategy to regulate the cryptocurrency sector. Since opening up crypto trading to retail investors last August, OSL and HashKey are the only exchanges to have obtained virtual asset trading licenses, with thirteen other entities currently in the application process. “The licensing process is stringent, requiring thorough due diligence checks to ensure the highest operational standards,” an SFC official explained.
The introduction of this insurance mandate is a significant stride towards protecting investor interests and enhancing the operational integrity of crypto exchanges in Hong Kong. “This regulation not only safeguards investors but also sets a benchmark for operational excellence, potentially inspiring similar measures worldwide,” the SFC official added, emphasizing the broader implications for global cryptocurrency market safety standards.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
