June 4, 2024
By Anjali Kochhar
The Securities and Futures Commission (SFC) of Hong Kong has taken quick action in response to the changing landscape of digital assets by revealing a new regulatory framework for virtual asset trading platforms (VATPs). With an emphasis on investor protection and market integrity, new regulations, which go into effect on June 1, represent a major turning point in the way the area views cryptocurrency trading.
Under the new guidelines, VATPs operating in or targeting Hong Kong investors must obtain licensing from the SFC or be deemed as licensed VATP applicants. The regulatory criteria encompass a range of factors, from management expertise and industry qualifications to stringent anti-money laundering (AML) measures and token admission standards. Notably, VATPs are also required to secure adequate insurance or compensation arrangements to mitigate custodial risks.
As of the June 1 deadline, only two platforms, OSL Digital Securities Ltd. (OSL Exchange) and Hash Blockchain Ltd. (HashKey Exchange), have secured licenses, signalling a rigorous vetting process. However, the SFC has identified 17 pending applicants, cautioning investors against engaging with unlicensed or provisionally licensed platforms that may not meet regulatory standards.
The list of applicants includes a diverse array of entities, such as Hong Kong BGE Ltd., Victory Fintech Company Ltd., and Panthertrade (Hong Kong) Ltd., among others. While these entities await official approval, they must adhere to strict compliance protocols and face potential closure if found in violation of regulatory requirements.
In response to the regulatory overhaul, several crypto exchanges, including OKX and Gate.hk, have announced their cessation of operations in Hong Kong. This underscores the profound impact of the new framework on the industry landscape, prompting a recalibration of strategies and operations among market participants.
Looking ahead, the implementation of these regulations is poised to reshape Hong Kong’s crypto trading ecosystem, fostering greater transparency, accountability, and investor confidence. By setting clear standards and enforcement mechanisms, the SFC aims to cultivate a resilient and sustainable digital asset marketplace that priorities the interests of all stakeholders.
Stakeholders will keep a close eye on developments as the industry develops, managing the regulatory environment and taking advantage of chances for innovation and expansion in the fast-paced world of bitcoin trading.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
