The Hong Kong Securities and Futures Commission (SFC) has reportedly made a significant change to one of its crypto regulations. The SFC has only granted approval to two crypto exchanges in the region so far, imposing rigorous criteria for regulatory clearance.
OSL, one of the approved exchanges, reports that the SFC has lowered the mandated insurance coverage on digital assets to 50%.
Hong Kong SFC Relaxes Rules on Crypto Insurance Coverage
In a recent statement, OSL announced its commitment to maintaining a high insurance ratio for assets, despite the recent reduction in requirements by the regulator.
“OSL is steadfast in its commitment to safeguarding at least 95% of regulated assets under custody, a decision that remains unchanged despite new regulatory guidelines permitting virtual asset service providers (VASPs) to reduce insurance coverage to 50% of assets under custody.”
It emphasized that its firm commitment to upholding a high level of insurance for consumers’ crypto is a response to the volatile market. Furthermore, the numerous cryptocurrency firms that have collapsed over the past few years.
Read more: 11 Best Altcoin Exchanges for Crypto Trading in January 2024
Notably, FTX, a cryptocurrency exchange, witnessed the loss of billions of customers’ funds.
Insurance proves its significance through the struggle faced by victims of the FTX collapse in reclaiming their assets.
The end of 2022 witnessed even billionaires experiencing substantial losses amid the crypto market collapse, highlighting the imperative need for robust insurance coverage.
According to data from Statista, former CEO of crypto exchange Binance, Changpeng “CZ” Zhao saw his net worth drop $82 billion by the end of 2022, following a series of crypto firms collapsing.
The statement clarified that the exchange has taken out a 2-year digital asset custody policy with Canopius.
Crypto Holders Prioritize Digital Asset Insurance
Head of Specie at Canopius, Nicholas Edwards, expressed approval of OSL’s objectives to ensure a safe platform:
“Our digital asset custody product provides an added layer of client protection and supports OSL’s mission to uphold the integrity and security of digital assets in today’s evolving financial ecosystem.”
However, crypto users are also able to take out their own private insurance outside of the exchange.
Read more: Crypto.com vs. Coinbase: Which Crypto Exchange Is Right for You?
Crypto Shield operates a policy that covers owners for the loss of assets from major exchanges.
The insurance policy covers 20 cryptocurrencies, including Bitcoin, Ethereum, Ripple, Solana, and Dogecoin, plus stablecoins like Tether and USD Coin.
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Source: https://beincrypto.com/hong-kong-sfc-crypto-insurance/