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Crypto exchanges in Hong Kong are racing against the clock, as they have until February 29 to apply for a virtual asset trading platform (VATP) license issued by the city’s Securities and Futures Commission (SFC). Failing to do so would require them to liquidate their businesses and exit the region within the next three months. 
Recently, Hong Kong also issued guidelines for firms that seek to provide crypto custody services to their customers in the region,<a href="https://thecoinrise.com/hong-kong-issues-guidelines-for-crypto-custody-firms/"> asking them to adhere to its standards for tokenization</a> and digital asset custody for locally authorized institutions. 
<h2 id="span-style-font-weight-400-deadline-for-hong-kong-exchanges-span">Deadline for Hong Kong Exchanges&nbsp;</h2> 
As of February 26, 18 crypto exchanges, including major players like OKX, Bybit, Crypto.com, and Binance-linked HKVAX, have <a href="https://www.sfc.hk/TC/Welcome-to-the-Fintech-Contact-Point/Virtual-assets/Virtual-asset-trading-platforms-operators/Lists-of-virtual-asset-trading-platforms">filed</a> for registration with the SFC. However, four applications have been withdrawn since the licensing regime opened in August 2023.&nbsp; 
Notably, Huobi HK, the Hong Kong subsidiary of Huobi (now HTX), submitted a VATP application on February 20 but withdrew it just three days later, without providing a reason for the withdrawal. 
<h3 id="span-style-font-weight-400-onboarding-retail-investors-span">Onboarding Retail Investors</h3> 
Once licensed, these exchanges will be able to onboard retail investors for trading Bitcoin (BTC) and Ethereum (ETH). The SFC is currently reviewing various altcoins and stablecoins for trading approval. 
Currently, the only exchanges with Hong Kong<a href="https://thecoinrise.com/hashkey-group-obtains-approval-for-otc-services-in-hong-kong/"> VATP licenses are HashKey</a> and OSL. Reports indicate that exchanges failing to comply with the VATP requirements must cease all operations by May 31. Similarly, those whose applications are rejected by the SFC must leave the city within three months. 
<h2 id="span-style-font-weight-400-collapse-of-exchanges-in-hong-kong-span">Collapse of Exchanges in Hong Kong</h2> 
Despite a clear regulatory framework, unauthorized crypto exchanges have created a problem in Hong Kong. In 2023, JPEX and Hounax, two of the largest crypto exchanges in the region, collapsed amidst allegations of Ponzi scheme operations.&nbsp; 
Investors suffered significant losses, with an<a href="https://thecoinrise.com/jpex-exchange-halt-its-earn-trading-product/"> estimated $180 million lost in the JPEX scandal</a> and $18.9 million in the Hounax scam. While authorities have frozen some funds linked to these incidents, the majority of investors’ money remains unrecovered. 
On February 26, another Hong Kong-based crypto exchange, BitForex, faced scrutiny after halting user redemptions and withdrawing $56 million from its hot wallets the day before. The exchange has also stopped responding to user inquiries, prompting an ongoing investigation. 
It is important to note that <a href="https://thecoinrise.com/hong-kong-leads-asias-crypto-policies-with-new-moves-in-2023/">the city has taken a balanced approach</a> when it comes to the regulation of digital assets, acknowledging the potential benefits of cryptocurrencies while addressing associated risks.&nbsp; 
The post <a href="https://thecoinrise.com/hong-kong-crypto-exchanges-must-apply-for-licensing-before-feb-26/">Hong Kong Crypto Exchanges Must Apply for Licensing Before Feb. 26</a> appeared first on <a href="https://thecoinrise.com">Latest News and Insights on Blockchain, Cryptocurrency, and Investing</a>.

Hong Kong Crypto Exchanges Must Apply for Licensing Before Feb. 26

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