A new diktat by Hong Kong’s financial watchdog has put the global financial hub’s cryptocurrency exchanges and custodians in a spot of bother as they are now required to fully insure the risks of hacking and theft associated with digital currencies, South China Morning Post reports, June 23, 2019.
Crypto Exchanges and Custodians Required to Fully Insure Client Funds
Recently, Hong Kong came in news for being the epicenter of large-scale protests against Chinese authoritarianism. A controversial Chinese bill which proposed the extradition of Hong Kong citizens to mainland China for court trial sparked a blaze of protests throughout the former British colony.
These protests highlighted the perils of state surveillance systems and in a bid to keep their digital identity private from China-controlled banks and financial institutions, a large chunk of Hong Kong people turned to cryptocurrencies like bitcoin (BTC) to safeguard their fortune.
Bitcoin is trading at a premium of about $160 in Hong Kong.
Pictured is the HK exchange TideBit where a single BTC is going for 73,120 HKD ($9337). A total of $159 above Coindesk’s current rate.
This is where the safe haven play comes in. pic.twitter.com/HNZWQkJ61j
— Mati Greenspan (@MatiGreenspan) June 17, 2019
Notably, being an autonomous state under China, Hong Kong has typically shown a more receptive attitude towards cryptocurrencies than the Chinese. Rather than putting a blanket ban on digital currencies, Hong Kong’s financial watchdog – the Securities and Futures Commission (SFC) – has introduced positive regulations to govern crypto ventures and transactions in the state.
Now, as part of the SFC’s “conceptual framework,” Hong Kong-based cryptocurrency exchanges and custodians are required to insure the risks associated with hacks and theft of virtual assets.