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Hong Kong Sets 50% Insurance Coverage for Licensed Crypto Exchanges

Hong Kong’s Securities & Futures Commission mandates 50% insurance for licensed crypto exchanges handling customer assets. OSL and HashKey are pioneers.

ShahZaib Ahmed

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Hong Kong Sets 50% Insurance Coverage for Licensed Crypto Exchanges

Securities and Futures Commission of Hong Kong has set a minimum 50% requirement of insurance for the licensed crypto exchanges handling the crypto assets of the customers.

Last week, the OSL exchange disclosed about the 50% coverage for all cryptocurrencies under custody. Moreover, OSL also disclosed its strategic partnership of two years with Canopius known to be a Lloyds of London underwriter, for a two-year insurance policy, securing 95% coverage for users’ assets.

On Nov. 16, 2023, HashKey Exchange, a licensed virtual asset trading platform in Hong Kong, partnered with OneInfinity for crypto insurance. The coverage protects users’ assets up to $50 million to $400 million, including potential expansion for server downtime, data back-up, and load management incidents.

Also Read: Hong Kong Leads in Changing the Crypto Landscape in Asia 2023

Hong Kong allowed retail investors to trade crypto since last August. Only OSL and HashKey have licenses for virtual asset trading. Currently, 13 entities are seeking licenses. Applicants must pass strict due diligence, including a comprehensive financial audit.

License applications are affordable, around a few hundred dollars. However, Web3 firms invest up to $25 million in developing and building applications. The major expenses are in product development and team-building, especially for traditional financial entities new to crypto.

Since Hong Kong allowed retail crypto trading in August, OSL and HashKey are the only licensed exchanges. Currently, 13 entities seek licenses, facing rigorous due diligence and financial audits. Despite low application fees, Web3 firms spend up to $25 million for licensing.

Expenses focus on product development and team-building, especially for traditional entities new to crypto. Keeping such things in the forefront the Securities & Futures Commission in Hong Kong now mandates licensed crypto exchanges to maintain a minimum insurance coverage of 50% for customer assets.

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