11/10/24

HONG KONG: Hong Kong to issue more crypto exchange licenses by year-end

As published on: financefeeds.com, Friday 11 October, 2024.

Hong Kong’s Securities Futures Commission (SFC) plans to issue more licenses to crypto exchanges and digital asset firms operating in the region by the end of 2024.

SFC CEO Julia Leung stated that the regulator expects to make progress in granting licenses to 11 Virtual Asset Trading Platforms (VATPs) currently on its list of potential licensees.

Leung mentioned that licenses would be issued in batches to improve compliance among crypto exchanges. Currently, a total of 16 companies are awaiting decisions on their VATP applications, with 11 already operating as “deemed to be licensed,” despite the SFC advising caution against trading with them.

The SFC has completed its first round of on-site reviews of these crypto firms. Leung confirmed that all VATPs adhering to the commission’s licensing model could expect their applications to be approved.

The announcement coincided with the SFC’s release of its 2024-2026 roadmap, which outlines its goals for advancing crypto regulations, promoting Real World Asset (RWA) tokenization, and exploring blockchain technologies more comprehensively.

A new proposed regime would see the SFC working alongside the Customs and Excise Department (C&ED) to oversee companies offering crypto OTC trading services.

Hong Kong currently limits retail crypto investors to buying only four specific cryptocurrencies. Critics have called out the region for its slow pace in crypto regulation despite its ambition to become a global hub for cryptocurrency and fintech.

This update on licensing comes shortly after HKVAX became the third crypto exchange licensed to operate in Hong Kong, joining OSL and HashKey, which received their licenses in 2020 and 2023, respectively.

Other crypto exchanges, including Crypto.com, Bullish, HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin, and Matrixport HK, have yet to receive full operational licenses.

Hong Kong’s regulator said it has identified unsatisfactory practices at several cryptocurrency exchanges applying for full licenses, following on-site inspections.

Hong Kong’s focus on crypto regulation intensified following a scandal in 2023 involving the now-defunct Dubai-based exchange JPEX. The exchange reportedly defrauded over 2,500 Hong Kong residents out of $165 million by hiking withdrawal fees and restricting access to funds.

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Hong Kong Crypto exchange China