One very welcome development for the crypto community is developing proper rules and regulations around the globe when it comes to the use of cryptocurrencies, particularly within the commercial sector as these are signs of crypto acceptance and also help to create uniformity in practices across the industry. While there is still much to be done in terms of crypto adoption as well as the navigating of the complex financial landscape, these developments are always welcome and have taken place from the United States to Asia to Europe with some countries being swifter than others.
On October 4, 2019, the Hong Kong Security and Futures Commission release a documents called “Proforma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets,” that is to guide the activities of crypto fund managers within the region.
Managing Crypto Funds
One of the things touched on in the documents is liquidity as the managers in Hong Kong are now required to have at least $330,000 in liquidity and also this in verified liquid capital. There was also discussion on having sufficient manpower and resources to conduct all duties effectively and crypto fund managers will also be required to undergo anti-money laundering and anti-financial terrorism and risk management procedures while they operate within Hong Kong.
Besides this, crypto fund fund managers are also required to have an independent custodian who worked on creating a division between the managers assets, the customer assets and so on. This is to create some level of order as well as prevent any mismanagement of funds, particularly those that belong to customers. Should fiat currency be received by the manager on behalf of a fund, a separate bank account must be opened with a recognized banking authority within Hong Kong for these purposes.
This is not the first of the guidelines on crypto-related business as guidelines on security tokens were released this year. Hong Kong is considered one of the most advanced in terms of cryptocurrency-related regulation within the financial sector and they seem to only be building up on this as time goes on.