Hong Kong’s Securities and Futures Commission, which is the regulating body that analogous to the United States Securities and Exchange Commission(SEC), published a new set of rules. These rules were published for the fund managers that control the cryptocurrency assets or deal with them.
These rules were published in a 37-page document that includes the guidelines on how the funds should be structured, custodianship, risk management, asset segregation, record keeping, and other important legal and logistical matters.
Certain special financial requirements were included in the rules. These were that the Virtual Asset Fund Manager should hold around $383,000 in liquid capital, which should be available all the time. Along with this, the asset managers were supposed to appoint functionally independent custodians.
The custodian could either be a third party or where self-custody is adopted. It would be Virtual Asset Fund Managers’ responsibility to ensure that the custodian has effective policies, procedures, and internal controls are in place to protect the assets. The documents have made it mandatory that the involvement of fund managers should increase in the project.
In cases where the client deposits in the form of fiat currencies, managers should have more than one account to hold the client’s money until the changes are made. The document also brings changes in the rules on participation in ICO’s. Any fund manager taking part in an ICO on behalf of the funds they manage, they should ensure that the tokens purchased are fairly allocated.
They also have to take care of intended allocation before the transaction, actual allocation after the transaction, and the reasons behind the differences in the intended and actual allocations. Bitcoin trading has increased on crypto exchange LocalBitcoins as citizens are unable to withdraw cash from the ATM’s.
Hong Kong residents are living in fear that the Chinese government may soon start monitoring digital payments. This is not the first time that citizens from a country have shifted to crypto assets in times of crisis. Venezuelan citizens have moved to Bitcoin as a method of payment and survival in the past two years because of government regulations and injustice.