Status

<p>The <strong>Hong Kong Securities and Futures Commission (SFC)</strong> has announced stringent measures to ensure compliance among local virtual asset trading platforms (VATPs) with new regulatory requirements. As of June 1, all local crypto trading platforms must obtain a license or a “deemed-to-be-license” to continue operations legally.</p> 
<p>On May 28, the SFC issued a reminder to cryptocurrency enterprises of the impending licensing deadline. The commission highlighted that unlicensed operation of VATPs would be considered a criminal offense, prompting immediate regulatory action. This includes conducting on-site inspections of platforms that have not yet completed their regulatory applications.</p> 
<h2 class="wp-block-heading" id="h-temporary-framework-for-pre-existing-firms">Temporary Framework for Pre-Existing Firms</h2> 
<p>The SFC has established a temporary framework for applicants deemed to be licensed, targeting firms that were active in the region before the new licensing regime was implemented. This framework aims to facilitate a smooth transition while ensuring adherence to regulatory standards.</p> 
<h2 class="wp-block-heading" id="h-enforcement-and-compliance-focus">Enforcement and Compliance Focus</h2> 
<p>The regulatory body emphasized its commitment to enforcing compliance, stating that it would undertake physical inspections to verify that deemed-to-be-licensed applicants meet the regulatory requirements. Special attention will be given to the implementation of Know Your Customer (KYC) procedures and the safeguarding of customer assets.</p> 
<h2 class="wp-block-heading" id="h-marketing-and-client-onboarding-restrictions">Marketing and Client Onboarding Restrictions</h2> 
<p>As part of the licensing application conditions, firms were cautioned against actively marketing their services or onboarding new retail clients until they obtain formal licenses. Additionally, they must <strong>block access to their services for residents of mainland China</strong>.</p> 
<h2 class="wp-block-heading" id="h-withdrawal-of-applications">Withdrawal of Applications</h2> 
<p>The lead-up to the licensing deadline saw a notable decrease in t<a href="https://www.unlock-bc.com/123495/crypto-exchanges-withdraw-license-applications-in-hong-kong-as-deadline-looms/" class="ek-link">he number of firms pursuing operational licenses</a>. Out of the initial 18 applications, 11 firms, including prominent names such as <a href="https://www.unlock-bc.com/123639/okx-withdraws-hong-kong-license-application-amid-regulatory-hurdles/" class="ek-link">OKX</a>, Gate.io, and Huobi’s local arm, withdrew their applications. Gate.HK, one of the affected exchanges, ceased new user acquisitions, halted marketing efforts, and began delisting tokens in preparation for restructuring to meet regulatory standards.</p> 
<h2 class="wp-block-heading" id="h-current-licensing-status">Current Licensing Status</h2> 
<p>As of the announcement, only two companies—<strong>OSL Digital Securities Limited and Hash Blockchain Limited</strong>—have been granted licenses to operate in Hong Kong. The SFC continues to advise investors to trade only on platforms that have obtained the necessary licenses.</p> 
<h2 class="wp-block-heading" id="h-conclusion">Conclusion</h2> 
<p>While the SFC’s regulatory framework aims to ensure a secure and transparent trading environment, the departure of 11 firms raises questions about the framework’s impact on the local crypto industry. The withdrawals suggest that the stringent requirements and compliance costs may pose significant challenges for some companies. As Hong Kong navigates these regulatory changes, the long-term effects on its position as a crypto hub remain to be seen.</p> 
<p>The post <a href="https://www.unlock-bc.com/123886/hong-kong-sfc-strict-crypto-rules-industry-shakeup/">Hong Kong SFC to Conduct On-Site Inspections of Local Crypto Trading Platforms</a> appeared first on <a href="https://www.unlock-bc.com">UNLOCK Blockchain</a>.</p>

Hong Kong SFC to Conduct On-Site Inspections of Local Crypto Trading Platforms

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