Coinsuper remaking itself as Wild West of cryptocurrency trading in Hong Kong comes to an end
- Coinsuper refocusing on institutional investors to conform to new rules in the works
- Co-founder Coinsuper says it can keep up trading volumes, beef up security as city sets up rules to help it become trusted centre for crypto trading
Coinsuper, a cryptocurrency exchange based in Hong Kong, is just a year old but has already weathered market turbulence that saw virtual currencies lose 80 per cent of their market cap in 2018.
That experience, says its co-founder and chief executive Karen Chen, toughened Coinsuper up for its next challenge: steering its business to institutional traders.
The change comes as Hong Kong is moving forward with new regulations to oversee what has been, up to now, a wild west market. No licenses have been needed in the city to operate a cryptocurrency exchange.
Different parts of the world are trying to figure out how to approach the volatile, still-new innovation of digital assets: Japan last year became the first country to regulate crypto exchanges, while China has banned them outright.
Hong Kong hopes to become a major trading centre for virtual assets, but in a safe and regulated manner overseen by its Securities and Futures Commission. Under the rules unveiled in November, exchanges can only serve institutional traders with portfolios of at least HK$8 million (US$1 million), offer no leverage or margin trading, and hold insurance. Those who want to be licensed must enter a “regulatory sandbox,” where the rules are being hammered out.
The regulatory framework will apply to exchanges that only service institutional investors. While it isn’t 100 per cent clear, insiders are reading this to mean that newly licensed operators for virtual asset trading will need to leave out retail investors, which account for a substantial amount of today’s trading.