Why Hong Kong crypto custodians and exchanges are sparring over customer assets

Originally appeared on DL News

‘The regulatory framework in Hong Kong creates a standard of conduct where previously no such standard existed.’ — Gary Tiu, OSL

Not everyone agrees with Chan’s take, of course.

Gary Tiu, executive director and head of regulatory affairs at OSL, a licenced Hong Kong-based exchange, told DL News it’s not the regulations that are creating a duopoly — it’s a sign of a maturing market.

“The regulatory framework in Hong Kong creates a standard of conduct where previously no such standard existed,” Tiu said.

If operators fall short of these standards, he said it’s not the fault of regulators being too harsh. In addition, regulations to safeguard assets custodied at exchanges already exist.

“Every year we get independently audited on our financial statements, on our compliance and on our technology,” he said.

In any event, Chan is hoping there will be a consultation period later this year for custodians, a sign regulators are seriously considering changes.

One thing custody outfits have going for them in Hong Kong is the struggle to get a handle on the many exchanges that offer unregulated crypto trading in the city.

For more than a year, Hong Kong’s financial regulators have pushed hard to get exchanges to apply for licences.