Hong Kong has set the insurance requirement for licensed crypto exchanges to 50%
The Hong Kong Securities and Futures Commission has set a minimum insurance requirement of 50% for licensed asset management clients.
As announced by the OSL exchange last week, the 50% insurance coverage minimum will apply to all assets in custody. At the same time, OSL announced that it has signed a two-year partnership with Canopius, the underwriter of Lloyd's of London, for an insurance policy covering 95% of the user's assets.
HashKey Exchange, another licensed virtual asset trading platform in Hong Kong, also signed a crypto insurance agreement with OneInfinity on November 16, 2023, which will have the potential to expand coverage to “server uptime, data backup, and load management issues.” Going forward. According to local news reports, the coverage ensures protection of users' assets valued at between $50 million and $400 million.
Since Hong Kong opened crypto trading to retail investors last August, OSL and HashKey remain the only exchanges to hold virtual asset trading licenses. At the time of publication, there are 13 entities applying for such licenses. As part of licensing requirements, applicants must pass rigorous due diligence checks, such as evidence that is more extensive than a traditional financial audit.
Although license application fees cost only a few hundred dollars, Web3 companies are spending up to $25 million each to build their applications for such licenses. Most of the costs come from product development and team building, often from scratch for applicants who are traditional finance entities with no prior exposure to crypto.
Related: China's Dangerous Bitcoin Court Decision, Is Huobi In Trouble Or Not?
