The Hong Kong Securities and Futures Commission (SFC) has relaxed its crypto regulation by lowering the mandated insurance coverage on digital assets from exchanges to 50%, with only two exchanges currently approved under stringent criteria.
Despite the regulatory change, OSL, one of the approved exchanges, reaffirms its commitment to safeguarding at least 95% of regulated assets under custody, citing the volatile market and numerous collapses of cryptocurrency firms as reasons for maintaining a high level of insurance coverage.
The significance of insurance in the crypto market is highlighted by incidents like the collapse of FTX, where billions of customers' funds were lost, and high-profile individuals like Binance's former CEO Changpeng Zhao experiencing substantial losses amid market downturns.
OSL has secured a 2-year digital asset custody policy with Canopius, emphasising the importance of client protection, while crypto users also have the option to obtain private insurance covering loss of assets from major exchanges through platforms like Crypto Shield, which offers coverage for various cryptocurrencies and stablecoins.