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.
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 Due to regulatory requirements, 12 license applications have been withdrawn, including those from Bybit, Huobi HK, and OKX.
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.
Comments