Hong Kong SFC Considering New Crypto Exchange Regulations

The chairman of the Hong Kong SFC Carlson Tong Ka-Shing is considering new crypto exchange regulations to tighten the protection for investors and to keep a lid on the crypto industry in the city.

The Hong Kong Securities and Futures Commission (SFC) is continually searching for new and effective ways to curb rogue crypto operators and to improve ongoing crypto exchange regulations. The SFC had already issued warnings over the past few months to exchanges to get their affairs in order and abide by SFC rules while warning investors to be careful with the choices they make.

Harsh but Fair Crypto Exchange Regulations

As more financial regulatory bodies and watchdogs start to oversee the crypto-asset industry, Tong Ka-Shing thinks it is important to safeguard investors while ensuring that the local industry remains robust and most importantly, in line with the law.

Talking to the South China Morning Post, Tong Ka-Shing outlined some of the wishes of the SFC by saying:

We do not think imposing a total ban on these platforms is necessarily the right approach, and it will not work in today’s internet world when trading can cross national boundaries. Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets.

It’s a smart move to recognize the international nature of the crypto world and that banning crypto-asset trading will not eradicate the problem, but will make it more complex for local and nationwide authorities to regulate.

"We Are Watching you!"

Attacking crypto exchange trading platforms seems like the logical place for the SFC to start. These exchanges are similar to traditional stock exchanges in many ways with centralized platforms generally operated by one group of people or a single organization. There are a handful of exchanges operating out of Hong Kong but very few are in line with current crypto exchange regulations.

Tong Ka-Shing will be handing over the reins to the SFC’s soon-to-be new chairman Tim Lui Tim-Lueng, which is expected to take place later this week. However, before leaving the post, Tong Ka-Shing warned unregulated crypto-asset exchange platforms in Hong Kong that:

We are watching you!

Although Tong Ka-Shing also pointed out that the SFC is restricted by technically only being able to regulate securities, they are keeping a keen eye on the industry. As the trading of crypto-assets and Bitcoin in Hong Kong goes through the roof, Tong Ka-Shing also mentioned that the SFC is biting at the bit to impose tighter crypto exchange regulations in the very near future.

Sub-accounts in Crypto: What They Are and How They Work


Julia Gerstein, a crypto trading bots enthusiast and a content writer at TradeSanta. My final goal is to help readers find what they need, understand what they find, and use what they understand appropriately.

Speaking generally, a sub-account is a segregated smaller account that is tied to a larger primary account. Sub-accounts may serve different functions depending on the objectives of their owners. The term can refer to multiple email addresses linked to one user or secondary accounts tied to a primary account with a financial institution or a bank.

For this article, we will be looking at sub-accounts as they exist in the crypto industry, and specifically on trading platforms.

Built-in Sub-Accounts

On trading platforms, the sub-accounts feature allows users to create a set of subsidiary accounts with different trading strategies, funds and end customers. On some platforms, general accounts already come with built-in sub-accounts.

For example, exchange platform Crypto Facilities provides each user with cash and margin accounts when they sign up. While deposits and withdrawals are completed with the cash account, trading an instrument requires users to make an internal transfer from a cash account to their margin account that corresponds to the instrument in question.

Each instrument has its own margin account. This grants users more control over their funds and allows them to manage risks for each instrument separately from their main balance.

Optional Sub-Accounts

Other cryptocurrency exchanges, such as Gemini and Binance, have launched sub-accounts as an optional feature for institutional investors.

As an optional feature, sub-accounts can serve to introduce additional security measures and different access levels between the main account and its subsidiaries. Binance has underlined the differences between a master account and its subsidiaries, providing the former with the exclusive ability to view all data and balances, transfer funds between accounts, and have full managerial control and access to a range of asset audit tools.

Here master accounts have sole control over the movement of assets between sub-accounts, and can grant each of them different access levels and permissions. This ensures that the main account has the power to direct and monitor the actions of all its associated accounts, while each sub-account can perform its function independently from other sub-accounts.

Not Only for Institutional Investors

While institutional investors have been able to create sub-accounts for a while, this feature is still being introduced by more and more major exchanges.

Now even individual investors can create subsidiary accounts to try and assess the performance of distinct trading strategies. For example, HitBTC recently introduced its own sub-accounts feature that is now available per user’s request.

At HitBTC, sub-accounts enable users to create separate subsidiary accounts with which they can utilize various trading styles and strategies with operational autonomy. While each sub-account is separate, all of them are still tied to a master account and contribute to the cumulative volume of all accounts connected to the master.

Because trading volume is measured cumulatively, the use of the subaccounts feature can open up additional benefits for traders such as lower commissions due to progressive fee tiers that reward users for contributing to the liquidity on the trading platform.

Therefore, users can perform a variety of different trading activities unconnected to each other, and all the activities will still weigh in the financial favor of the parties involved. Master accounts also have access to important data such as the performance of each sub-account and total trading fees of all linked accounts combined. While the feature is designed with institutional and corporate clients in mind, on HitBTC any user can create sub-accounts upon request.

The adoption of this feature by more and more trading platforms will be beneficial for both institutional and individual traders. Some users can utilize it to execute different trading strategies or try various algorithms with a clear picture of their effectiveness, others to manage their team and analyze the performance of each account securely and conveniently.

Featured image by Tyler Franta on Unsplash