Hong Kong’s Securities and Futures Commission (SFC) is set to issue more licenses for crypto exchanges and digital asset firms by the end of year.
Hong Kong’s Securities and Futures Commission (SFC) is set to issue more licenses for crypto exchanges and digital asset firms by the end of year.
This announcement comes as the regulator aims to enhance compliance among Virtual Asset Trading Platforms (VATPs) operating in the region.
SFC CEO Julia Leung noted that the licensing process would occur in "batches," indicating a structured approach to licensing the 11 firms currently on the SFC's potential licensee list. While a total of 16 companies are awaiting decisions on their VATP applications, 11 are functioning under a "deemed to be licensed" status.
However, the SFC has advised traders against engaging with these firms until official licenses are granted.
The SFC has completed its first round of on-site reviews for these crypto firms. Leung stated that VATPs adhering to the SFC's licensing model can anticipate approval for their applications. This development is part of the SFC's broader roadmap for 2024 to 2026, which includes advancing regulations for crypto platforms and promoting the tokenization of Real World Assets (RWA).
The urgency for strengthened regulations follows a significant incident involving the now-defunct Dubai-based exchange JPEX, which defrauded over 2,500 Hong Kong residents, leading to a loss of approximately $165 million.
In response, the SFC has increased efforts to regulate the crypto sector and has formed a task force with the police to address illegal activities in the market.
Currently, retail investors in Hong Kong are limited to trading four cryptocurrencies. Despite the criticism regarding the slow pace of regulatory development, Leung expressed confidence that the regulatory framework for crypto assets would be finalized by the end of 2024.
This update on licensing comes shortly after HKVAX became the third exchange to receive official approval to operate in Hong Kong, following OSL and HashKey.
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