Hong Kong regulator reduces statutory insurance coverage for cryptocurrency exchanges

This article briefly:

-Hong Kong’s Securities and Futures Commission (SFC) has approved only two cryptocurrency exchanges in the region and has set strict regulatory licensing standards.

-OSL disclosed that the SFC has amended its regulations to reduce mandatory insurance coverage for digital assets to 50%.

-Despite the regulatory adjustments, OSL emphasized its commitment to maintaining a high insurance ratio.

Hong Kong’s Securities and Futures Commission (SFC) has reportedly made significant changes to one of its cryptocurrency regulations. So far, the SFC has approved only two cryptocurrency exchanges in the region and has set strict regulatory licensing standards.

OSL is one of the exchanges that received approval, reporting that the SFC has reduced mandatory insurance coverage for digital assets to 50%.

Hong Kong’s SFC Relaxes Cryptocurrency Insurance Coverage Rules Bitcoin mining

In a recent statement, OSL announced that it remains committed to maintaining high insurance ratios for assets despite the regulator’s recent reduction in requirements.

“OSL is firmly committed to protecting at least 95% of assets under custody, and this decision remains unchanged despite new regulatory guidance allowing Virtual Asset Service Providers (VASPs) to reduce insurance coverage to 50% of assets under custody.”

It emphasized that its firm commitment to providing consumers with a high level of insurance coverage for their cryptocurrencies is a response to turbulent markets. In addition, countless cryptocurrency companies have collapsed over the past few years.

Notably, cryptocurrency exchange FTX witnessed the loss of billions of customer funds.

Insurance proved its importance through the struggles FTX crash victims faced in recovering their assets.

The collapse of the cryptocurrency market at the end of 2022, where even billionaires suffered huge losses, underscored the urgent need for strong insurance coverage.

According to Statista, the former chief executive of cryptocurrency exchange CoinSafe, the net worth of Zhao Changpeng “CZ” fell by $82 billion by the end of 2022 as a series of cryptocurrency companies collapsed.

As of December 2022, the world’s largest billionaire to lose net worth due to the cryptocurrency crash.ETChash Miner

Source: Statista

The statement clarified that the exchange has signed a 2-year digital asset custody policy with Canopius.

Cryptocurrency Holders Prioritize Digital Asset Insurance

Canopius’ Head of Specie, Nicholas Edwards, expressed his approval of OSL’s goal of ensuring the security of the platform:

“Our Digital Asset Custody product provides an additional layer of customer protection and supports OSL’s mission to maintain the integrity and security of digital assets in today’s evolving financial ecosystem.”

However, cryptocurrency users can also purchase their own private insurance outside of an exchange.

Crypto Shield operates a policy that insures major exchanges against loss of assets.

The insurance policy covers 20 cryptocurrencies, including Bitcoin, Ether, Ripple, Solana and Dogecoin, as well as stablecoins such as Tether and USD Coin.