The Securities and Futures Commission (SFC) of Hong Kong has officially released regulations for crypto hedge fund managers.
The SFC released a comprehensive 37-page document titled, “Proforma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets,” which outlined new rules for crypto hedge funds.
The document comes after ACT reported on the increase in Chinese and other investors in Asia turning to crypto hedge fund managing companies, some of which were in Hong Kong. The companies in Hong Kong had previously spoken of the regulatory issues and red tape when setting up. Perhaps it could get even more difficult with these new regulations. So, what have the new regulations set out?
The new regulations
Crypto hedge funds are required to have liquid capital at the amount of 3 million Hong Kong dollars ($383,000). They are required to always have sufficient personnel and other resources to keep themselves afloat, as well as adhering to anti-money laundering compliance.
They will also require an independent custodian. This is to also ensure the safety of funds. Assets should be segregated with fund assets different from their own. Should a company get fiat funds for investment, they need to set up a separate account for the funds in a Hong Kong-based bank.
Any arrangements must be seen under the criteria and include, according to Coin Telegraph, “hardware and software infrastructure, security controls over a key generation, storage, management and transaction as well as the process of handling blockchain forks, the agency stated.”
This report follows the SFC version on the security token offerings, giving guidance in this field. Hong Kong is clearly warming to the crypto community much like other Asian nations, with its regulatory entities giving clear guidance.