With the crypto-market seeing many investors foray into the space over the past few years, accompanied by markets in the space going on to face more and more operational challenges due to regulatory uncertainty, Hong Kong’s Securities and Futures Commission [SFC] had introduced licensing laws to respond to investors’ concerns in October 2018.
While this was a positive development for the industry, one year on, there hasn’t been much progress made. According to a recent report, very few crypto-funds have been approved for licensing in Hong Kong.
The report could identify only one platform called Diginex, which is one of the very few fund managers that have been approved to invest in cryptocurrencies. According to Henri Arslanian, Hong Kong-based global crypto-leader at PwC, there has been more interest among smaller crypto-dedicated funds, as opposed to larger ones.
Gaven Cheong, a partner at law firm Simmons & Simmons, said,
“Last year there was a lot of excitement but since then we haven’t seen much activity. Not many new managers in this area have the background, experience or support to mount such an undertaking, and this has meant that many applications never even get started.”
Some have speculated that this could be due to operational and infrastructural issues, rather than the regulator being obstructive, while others believe that the industry being a nascent one is also a factor.
This news comes after Hong Kong’s SFC released a statement in which the watchdogs planned on licensing cryptocurrency exchanges for the first time after it identified significant risks associated with investing in virtual assets. According to the said licensing plan, all funds that invest more than 10% of their portfolios in crypto-assets will be licensed by the SFC. Additionally, if a cryptocurrency platform wanted to be licensed and regulated by the city’s watchdogs, they should voluntarily apply for the SFC’s regulatory sandbox.
Gemini shines; Binance, Coinbase fall in CryptoCompare’s exchange rankings
Major cryptocurrency exchanges, Binance and Coinbase, have slipped in the revised version of a cryptocurrency exchange ranking list. The data, compiled by crypto-asset data provider CryptoCompare, was titled ‘CryptoCompare Exchange Benchmark Q3 2019,’ and used a new metric for the latest edition. The tool, dubbed the ‘Exchange Benchmark,’ rested on 30 factors, including the team behind the exchanges, the quality of their markets, their geographical location, legal status, and data provision.
Released on 19 September, Winklevoss twins’ crypto-platform Gemini dominated the chart and was graded AA, followed by ItBit at second, Coinbase at third, and Kraken on the fourth position. Notably, Coinbase had previously dominated the June crypto-exchange rankings and was rated AA. Bitstamp, Liquid, OKEx, Poloniex followed suit, and were rated A.
Bitfinex, one of the world’s largest Bitcoin exchanges, was ranked 10th and graded A. Interestingly, Bitfinex wasn’t even in the top 10 of the previously released rankings.
Binance was positioned as the 12th most-trusted exchange with 10.5 points awarded for security. The Malta-based platform slipped four positions since June, when the exchange was ranked 8th. The reason behind the same may be in light of the security breach in May, wherein 7,070 Bitcoins were stolen by hackers in a single transaction.
Additionally, the updated Exchange Benchmark noted that top-tier exchanges graded between AA-B accounted for 33% of the global trading volume. However, lower tier exchanges rated between C-E made up for 67%.
Talking about the Exchange Benchmark tool which is essentially meant to combine both qualitative and quantitative metric data without using volume directly, Charles Hayter, Co-founder and CEO of CryptoCompare, said,
“Our second Exchange Benchmark now includes a vastly expanded set of exchanges and even more granular analysis to enable market participants and new entrants to identify the best trading venues worldwide.”