November 6, 2019 Hong Kongs’ Securities and Futures Commission publishes a regulatory framework for crypto exchanges.

The position paper describes the SFC’s regulatory approach, offering rules and guidelines for licensing cryptocurrency exchanges. The framework only applies to trading platforms operating in Hong Kong whose virtual assets include at least one security token; the SFC claims no power to license or supervise platforms trading non-security assets, and peer-to-peer exchanges will not be reviewed by the organization. Notable provisions include: 98% of client assets must be stored in cold wallets, custody providers must ensure insurance policies substantially (95%) cover risks of assets held in storage, licensees must provide services to only professional investors, obtain written approval for proposed trading platform product additions, and provide the SFC monthly reports on business activities in a prescribed format.