The number of people getting involved with cryptocurrencies continues to grow. Since it includes an increase in retail investors along with professionals, more governments across the world are looking to regulate the industry properly.
The latest government to introduce a new set of rules is Hong Kong. On Thursday, November 1, Hong Kong regulator published a statement which proposes new rules for cryptocurrency funds. It also mentions a possibility that crypto exchanges will be formally regulated in the future.
Securities and Futures Commission (SFC) launched a series of steps in what they call “regulatory standards guidance”. The SFC chief Ashley Alder indicated that these steps would eventually lead to a formally regulated environment.
Compared to mainland China, Hong Kong’s approach to cryptocurrencies is quite different. Regulation on crypto is pending, but all related activities are deemed legal.
Ashley Alder mentioned that virtual assets market is still young and vulnerable to abuse, manipulation and outright fraud.
The future of crypto exchanges
The latest proposal specified a sandbox scheme for fund managers, who invest over 10% of their funds into cryptocurrencies, which is designed to make it easier to develop services and products. Other entities will have to report their business practices to the SFC in order to receive a license.
There is a possibility that the SFC may start directly supervising crypto exchanges in the future. It proposed that crypto trading platforms should have standards and regulations comparable to currently licensed automated trading platforms on the market.
Earlier Taiwan government has chosen not to regulate Initial Coin Offerings (ICO), but last week they announced that they would introduce rules and regulations governing ICOs.
It looks like major altcoin and Bitcoin markets have stabilized and gained general acceptance. It is only logical for jurisdictions worldwide to make a move towards a well-regulated environment in the crypto industry.