Hong Kong Regulator Plans Batch Approvals for Crypto Exchange Licenses by Year-End

The Hong Kong Securities and Futures Commission (SFC) has announced its intention to accelerate the approval process for crypto exchange licenses, aiming to issue them in batches by the end of 2024. 

Julia Leung, chief executive of the SFC, confirmed in an interview with local news outlet HK01 that progress is expected before year-end, following the recent licensing of HKVAX, the third such approval under the city’s new crypto trading regime.

📰 Julia Leung, the chief executive of the Hong Kong Securities and Futures Commission, shared with HK01 that the regulator hopes to make progress by the end of the year, including the issuance of licenses in groups. pic.twitter.com/EAw8tWmwmk

— The Roundtable – Web3/NFT/Crypto (@0xRoundTable) October 7, 2024

The SFC granted a license to HKVAX, a firm specializing in security token offerings and the tokenization of real-world assets. This follows previous approvals for OSL and HashKey, marking a pivotal moment in Hong Kong’s efforts to position itself as a leading financial hub for virtual assets. 

Leung highlighted that 11 platforms are currently on the SFC’s “deemed-to-be-licensed” list of virtual asset trading platform applicants. 

The SFC has completed the initial phase of onsite inspections for these applicants and has requested necessary adjustments to ensure compliance with regulatory standards. Leung emphasized the importance of this process, stating that the goal is to achieve tangible progress in licensing by the end of the year.

Concerns Over Regulatory Stringency

However, critics feel that the conditions set for firms wanting to get a license in Hong Kong are very strict. Duncan Chiu, a Hong Kong legislative councilor, has also expressed concerns that many of the requirements are overly stringent and may discourage large international stock exchanges from participating in the market. 

OKX, Gate.io, and HTX are some of the known exchanges that have withdrawn their application for licenses; this is what makes many question the competition for cryptocurrency trading in Hong Kong.

As of now, two companies, Bullish and Crypto.com, are still listed in the SFC’s list of license applicants, which means that some firms still desire to navigate the complexities of the bureaucratic system.

The Path Forward for Crypto in Hong Kong

As stated earlier, Hong Kong aims to be among the first to attempt a legal framework for formal licensing for trading platforms in cryptocurrencies by June, 2023, showing its commitment to fostering and providing a secure environment for the VA business. Licensed exchanges are permitted to offer retail trading services to promote the best interest of the consumer and the markets. 

However, the evolution of the situation in the following months will be crucial to understanding how Hong Kong will act in the global crypto market since the SFC is still in the process of issuing more licenses. In the end, it will remain an adjustment that will persist on the part of applicants and the regulator’s commitment to change that will define the future of crypto trading in the region.