Hong Kong’s Securities and Futures Commission has established a distinctive mandate stipulating that licensed cryptocurrency exchanges must maintain a minimum % insurance coverage of 50% to safeguard customer assets.
OSL Exchange recently revealed this requirement, highlighting its broad application to all assets under custody. In tandem with this announcement, OSL unveiled a significant two-year partnership with Canopius, a syndicate affiliated with the renowned underwriter Lloyd’s of London. This strategic collaboration aims to provide an insurance policy encompassing an impressive 95% coverage for the assets held by OSL Exchange’s users.
HashKey Exchange, a licensed virtual asset trading platform based in Hong Kong, entered into a crypto insurance pact with OneInfinity on Nov 16, 2023. The agreement extends coverage to include events linked to “server downtime, data back-up, and load management” in the upcoming days. As reported by local news outlets, this insurance safeguards users’ assets from $50 million to $400 million.
The Rigorous Path To Hong Kong Virtual Asset Trading Licenses
Since Hong Kong extended access to cryptocurrency trading for individual investors in August of last year, OSL and HashKey have stood out as the sole exchanges authorized to engage in virtual asset trading. Presently, 13 entities are in the process of seeking similar licenses.
Moreover, to meet the stringent criteria for licensing, applicants are subjected to rigorous due diligence examinations, including a comprehensive financial audit that extends beyond the typical proof-of-reserves assessment.
While the license application fees may be relatively modest, Web3 companies are investing staggering amounts, up to $25 million, in developing their applications for these licenses. The major expenses primarily stem from product development and team expansion, particularly for applicants who are conventional financial entities entering the crypto space for the first time.
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The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.
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