Hong Kong Crypto Exchanges Struggle with Licensing Issues

by Giorgi Kostiuk

2 years ago

Made with AI

Licensing Challenges for Hong Kong Exchanges
Violations and Risks
Measures and Consequences

Crypto exchanges in Hong Kong are facing challenges in securing full licenses as regulators tighten controls and address multiple violations.

Licensing Challenges for Hong Kong Exchanges

According to a Bloomberg report, crypto exchanges in Hong Kong are struggling to secure full licenses. The Hong Kong Securities and Futures Commission (SFC) identified unsatisfactory practices at 11 'deemed-to-be-licensed' exchanges, raising doubts about their ability to meet licensing requirements.

Violations and Risks

Inspections revealed that some exchanges were overly reliant on a small number of executives for client asset management, while others did not adequately guard against cybercrime risks. The exchanges under scrutiny include major players such as Crypto.com and Bullish as well as local trading platforms like HKbitEX and PantherTrade.

Unsatisfactory practices in managing crypto assets have been found.Hong Kong Securities and Futures Commission (SFC)

Measures and Consequences

Currently, only two platforms — OSL and HashKey — hold full licenses in Hong Kong. Other platforms face increased scrutiny and requirements to protect client assets and follow robust 'know your client' protocols. This heightened oversight follows a scandal involving the unlicensed platform JPEX, accused of defrauding over $200 million. Due to regulatory requirements, 12 license applications have been withdrawn, including those from Bybit, Huobi HK, and OKX.

Strict measures are aimed at ensuring complete security of client assets.SFC spokesperson

The licensing challenges faced by crypto exchanges in Hong Kong highlight the importance of stringent regulation and compliance with security standards. Regulatory authorities continue to work on improving conditions for the safe operation of the crypto industry in the region.

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