The Securities and Futures Commission (SFC) of Hong Kong has decided to issue a new regulatory standard at the beginning of November 2018. According to its new regulation, the exchanges of crypts, platform managers and fund managers will be affected .
This will also affect a company called InVault, from Shanghai, which was recently launched in Hong Kong and will benefit from this new set of rules, which will function as a future conceptual framework for the regulation that will legislate on the encrypted.
The new Hong Kong guidelines state that the exchanges of crypts and asset holders must hold insurance for their activities in order to prevent losses of any investor's funds. You can have hot wallets and even self-custody of your assets if they are insured.
With so many high profile thefts going on in Asia now, this measure will now be very important for the development of the sector in the region. Exchanges that keep all their money in hot portfolios will need 100% insurance coverage, which means they will have to look for specialized companies that offer these services and InVault is only the company for that.
According to our information, the SFC generally expects the company insurance policy to cover at least all assets in the hot warehouse. However, not all cold store activities must be insured.
InVault and how the company will benefit from the new legislation
At the moment, InVault has about one million ETHs in custody. Most of the money is in China and the company has announced that the first custody service that will be offered by the operator as soon as it enters the Hong Kong market It will be focused on this.
This company is already supported by Matrix Partners China, a local venture capital fund. In Vault it was possible to obtain a fiduciary license from the SFC which will allow the complete automation of its services in the region in December.
Kenneth Xu, the founder of InVault, told the South China Morning Post (SCMP) that he firmly believes that trusted custody services will be very important to provide a regulated channel between the traditional financial space and the encrypted world.
In his opinion, InVault is currently carrying out important discussions with a number of insurers in order to provide all the coverage provided by the Hong Kong regulator to reduce all risks.
With this new regulation, InVault will be highly advantaged. The company offers a regulated service that will probably become very popular and this will bring many customers from Singapore and Hong Kong.
The Singapore Monetary Authority, which acts as the local regulator for the country, has also revealed a new framework and regulation to address cryptocurrencies.
The future of Crypto Custody services
With this shift from companies, it is clear that cryptocurrency custody services are popular now and that they will help a lot to protect customers from any chance of losing their assets. In this way, hacking and events such as employees accessing and encrypting the scams will be much less common in the future.
Both Hong Kong and Singapore are strongly interested in regulating its regions and protecting investors and there is a good chance that other regions may be influenced later by what is happening in these countries. Therefore, companies like InVault have a lot to gain with this opportunity on how the market works.