Crypto Custodians vs Exchanges: The Ongoing Battle in Hong Kong’s Cryptocurrency Market

• Hong Kong’s cryptocurrency custodians and exchanges are currently in disagreement over the custody of customer assets.
• Zodia Custody’s CEO, Kal Chan, advocates for independent management of client assets, separate from exchange operations.
• Despite regulatory push, only a few exchanges in Hong Kong have complied with licensing requirements.

In Hong Kong, a dispute has erupted between cryptocurrency custodians and exchanges over the custody of customer assets. This article explores the differing viewpoints and the potential impact on the city’s burgeoning crypto industry.

Dispute over Cryptocurrency Custody in Hong Kong

Hong Kong’s cryptocurrency custodians and exchanges find themselves at odds over the custody of customer assets, sparking a contentious debate within the city’s burgeoning crypto industry. At the forefront of this dispute is Zodia Custody, a company backed by the British banking giant Standard Chartered. Zodia’s CEO, Kal Chan, has been vocal in advocating for regulatory oversight specifically tailored to cryptocurrency custodians.

Zodia’s Advocacy for Independent Management

Chan asserts that the current practice of exchanges managing both their funds and client assets could lead to perceptions of assets commingling, undermining trust in the market. Zodia aims to work closely with regulators to develop regulations that would allow custodians to manage client assets independently, separate from exchange operations. According to Chan, such a regulatory framework would instill confidence among institutional investors, who prioritize security and transparency when choosing where to store their digital assets.

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