Summary
Regulations are being framed to protect customers in the digital asset industry after the collapse of FTX, Terra, and Three Arrows. Firms should hold clients’ assets in separate accounts and prevent their use for the firm’s own accounts to prevent insolvency.
Key Points
1. The collapse of FTX, Terra, and Three Arrows has prompted authorities to consider implementing regulations or guidance to safeguard customers in the digital asset industry.
2. The HKMA document recommends that firms should keep clients’ digital assets in separate accounts that are segregated from the company’s own assets, especially in cases of insolvency.
3. Companies are advised to prohibit the use of client assets for the firm’s accounts, emphasizing the importance of maintaining transparency and accountability in handling digital assets.