Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has issued its third license under the new crypto trading platform regime, with additional approvals anticipated by the end of the year.
HKVAX is the latest platform to receive a license, joining OSL and HashKey, which were earlier approved to provide crypto trading services in Hong Kong.
11 More Platforms Under Consideration
In an interview with HK01, Julia Leung, Chief Executive of the SFC, revealed that 11 more crypto platforms are on the SFC’s “deemed-to-be-licensed” list. These platforms have applied for licenses under the new regulatory framework. Leung noted that the SFC has already carried out initial on-site inspections and requested these platforms make necessary adjustments to comply with Hong Kong’s regulatory requirements.
The regulator aims to issue more licenses in batches by year-end, reflecting Hong Kong’s ambition to solidify its status as a global financial hub.
HKVAX, the newly licensed firm, offers a range of services including over-the-counter (OTC) trading, exchange services, and custody solutions. According to Anthony Ng, co-founder and CEO of HKVAX, the approval “affirms HKVAX’s position and demonstrates Hong Kong’s commitment to leading the virtual asset industry.”
Hong Kong’s Crypto Licensing Regime Gains Momentum
In June 2023, Hong Kong launched its new licensing framework for crypto trading platforms, allowing them to legally offer services to retail investors. This move was widely seen as an effort to attract more crypto firms to the city.
However, the new rules have sparked debate. Duncan Chiu, a local lawmaker, has criticized the framework as “excessively stringent,” suggesting that these tough regulations have discouraged some global exchanges from entering the Hong Kong market.
Several major players, including HKVAEX (suspected to be affiliated with Binance), IBTCEX, QuanXLab, Huobi HK, Gate.HK, OKX HK, and Bybit (Spark Fintech Limited) have all withdrawn their license applications. However, prominent exchanges like Bullish and Crypto.com are still under consideration.
Regulatory Challenges After Inspections
Recent inspections by the SFC of the 11 “deemed-to-be-licensed” platforms have uncovered multiple shortcomings. Some exchanges were found to be overly reliant on a limited number of executives for the custody of client assets, raising concerns about their ability to manage these responsibilities securely. Additionally, several platforms lacked adequate cybersecurity measures to protect against cyber threats.
While the SFC has not disclosed the names of the firms that fell short of the standards, it warned that platforms failing to address critical issues may lose their provisional status or have their license applications rejected.
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