JPEX

The Securities and Futures Commission (SFC) of Hong Kong has identified that certain cryptocurrency exchanges operating under preliminary approval are not fully compliant with the region’s new regulations. Although these exchanges have been given initial authorization to operate, they have not yet met all of the SFC’s requirements to obtain full licensing. 
A spokesperson from SFC said that for platforms unable to address “critical deficiencies identified during on-site inspections,” the regulatory company may choose to revoke their deemed-to-be-licensed status or reject their license applications. 
<h3 id="span-style-font-weight-400-hong-kong-finds-deficiencies-in-deemed-to-be-licensed-crypto-exchanges-span">Hong Kong finds deficiencies in ‘Deemed to Be Licensed’ crypto exchanges</h3> 
The SFC is intensifying its focus on investor protection and regulatory clarity, taking stringent action against non-compliant exchanges in Hong Kong. As of June 1, the commission made operating an unlicensed virtual asset trading platform (VATP) in the region illegal, putting significant pressure on crypto exchanges that have yet to obtain licenses. Specifically, firms categorized as ‘Deemed to be Licensed,’ which refers to those operating in the region before the new licensing regime, are facing heightened scrutiny. 
According to the SFC’s recent investigations, most of these applicants are still not ready and are at odds with the regulatory requirements. The SFC discovered some exchanges leave the custody of customer assets to a few executives to manage. Moreover, others do not try to protect their investors, allowing cybercriminals to infiltrate their systems. Some of the Crypto exchanges found on the wrong side of regulatory compliance include Crypto.com, Bullish, HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin and Matrixport HK. 
Only <a href="https://www.sfc.hk/en/Welcome-to-the-Fintech-Contact-Point/Virtual-assets/Virtual-asset-trading-platforms-operators/Lists-of-virtual-asset-trading-platforms" rel="nofollow noopener" target="_blank">two platforms,</a> OSL and HashKey, have successfully secured full licenses in Hong Kong. The SFC has assured that it will continue to issue licenses. However, despite these assurances, some exchanges, including OKX, Bybit, and Huobi HK, have withdrawn their license applications. 
<figure id="attachment_572560" aria-describedby="caption-attachment-572560" style="width: 100%" class="wp-caption aligncenter">
 <img loading="lazy" decoding="async" class="wp-image-572560 size-full" src="https://www.cryptopolitan.com/wp-content/uploads/2024/08/Hong-Kongs-SFC-finds-crypto-exchanges-‘non-compliant-with-new-regulations.png" alt="Hong Kong’s SFC finds crypto exchanges ‘non-compliant’ with new regulations" width="905" height="903" srcset="https://www.cryptopolitan.com/wp-content/uploads/2024/08/Hong-Kongs-SFC-finds-crypto-exchanges-‘non-compliant-with-new-regulations.png 905w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Hong-Kongs-SFC-finds-crypto-exchanges-‘non-compliant-with-new-regulations-300x300.png 300w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Hong-Kongs-SFC-finds-crypto-exchanges-‘non-compliant-with-new-regulations-150x150.png 150w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Hong-Kongs-SFC-finds-crypto-exchanges-‘non-compliant-with-new-regulations-768x766.png 768w" sizes="(max-width: 905px) 100vw, 905px">
 <figcaption id="caption-attachment-572560" class="wp-caption-text">
 List of virtual asset trading platform applicants in Hong Kong. Source: Securities and Futures Commission
 </figcaption>
</figure> 
<h3 id="span-style-font-weight-400-sfc-introduces-regulatory-measures-after-the-jpex-scandal-span">SFC introduces regulatory measures after the JPEX scandal</h3> 
In 2023, JPEX, an unlicensed crypto platform, stole over $200 million in investor money, affecting nearly 3000 users. According to the SFC, JPX used crypto influencers to deceive the general public into thinking the exchange had applied for a VATP license in Hong Kong. However, the regulator did not receive an application from the company.&nbsp; 
Following this scandal and the growing demand for a regulatory framework, the Securities and Futures Commission (SFC) introduced measures on September 25, 2023, to bolster oversight of crypto exchanges in the region. These measures are designed to enhance public transparency and address investors’ demands by publishing a list of crypto companies applying for licenses in the country.

Hong Kong’s SFC finds crypto exchanges ‘non-compliant’ with new regulations

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