BTC Exchanges Having Hard Time Complying With SFC Regulation

BTC exchanges in Hong Kong are having quite the trouble complying with the new regulations from the Securities Futures Commission that demands compulsory insurance coverage against crypto theft. Let’s find out more about the insurance policies in the coming altcoin news below.

The Securities and Futures Commissions is another one of the regulatory bodies that joined in the prescription of a detailed governance framework for the virtual currency market. However, the nature of the industry brought up to the many factors which lead the platforms facing significant difficulties while trying to abide by the laws. The financial regulator of Hong Kong wants the local bitcoin exchanges to provide full coverage for the customers’ funds. The new law is a part of the regulations which are expected to come since the regulators are aiming to regulate the entire Hong Kong Crypto scene.

The SFC published a document offering a general overview of the insurance framework for the BTC exchanges which needs to be followed. An excerpt from the reports reads:

 ‘’The SFC generally expects that the insurance policy would provide full coverage for virtual assets held by a platform operator in hot storage and a substantial coverage for those held in cold storage (for instance, 95 percent).’’

As previously reported in the DC Forecasts latest cryptocurrency news, the Hong Kong regulators choose a different governing option from the other countries including China and Mainland. They did not ban cryptocurrency trading or ICOs but the SFC prefers to make a more robust framework which will allow the crypto commerce to thrive.

For the BTC exchanges, however, getting insurance coverage is a major issue. Insurers are not willing to create policies that will provide coverage for an industry like virtual currencies since they are not common. One of the biggest issues comes with the ongoing cyber attacks which harm the BTC exchanges the most. These attacks cost about $2billion in 2018 and some of the major exchanges were contributing with more than 50 percent of the total amount. The Insurance companies will provide only coverage for crypto exchanges and will charge a premium because of the high risks related to the digital assets. The Insurance giant Aon’s Murray Wood noted:

 ‘’The number of insurers and reinsurers that are willing to underwrite cryptocurrency cybersecurity risk is extremely narrow. The amount of available coverage capacity today is under US$1 billion per transaction.’’