Hong Kong's Revised Crypto Exchange License Costs

The cost of acquiring crypto exchange licenses in Hong Kong has undergone a significant reduction, shifting from the previous $25 million price tag in 2023. Livio Wang, the COO of HashKey Group, has clarified that the current expenses amount to several million USD, which translates to tens of millions in Hong Kong dollars.

Wang explained that the expenses vary depending on the stage of preparation or operation. Established entities like HashKey have made substantial investments amounting to tens of millions of dollars in the overall exchange sector. However, platforms that are still in the licensing phase are expected to face lower costs.

Since June 1, Hong Kong authorities have implemented stringent measures, leading to the expulsion of all unlicensed crypto exchanges and the possibility of criminal charges for non-compliance. As of now, only HashKey and OSL possess full licenses, while more than 11 firms are in the process of obtaining licensing status.

These regulations have prompted certain exchanges like OKX, Gate, and Huobi to retract their license applications, resulting in market disruptions. Nevertheless, HashKey Exchange has succeeded in attracting $500 million in user funds and managing a cumulative trade volume of $440 billion. The number of active customers has surged by 267% within a week.

In April, HashKey introduced a global exchange in Bermuda to cater to international users, steering clear of regions such as Hong Kong, China, the United States, and others following the demise of JPEX, an unlicensed exchange that swindled investors out of $166 million in 2023.

The financial authorities in Hong Kong have committed to a new era of supervising virtual assets under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). Institutions lacking a "Virtual Asset Service Provider" license are now barred from conducting operations within the city.

The shift towards establishing Hong Kong as a prominent crypto hub is aimed at striking a balance between protecting investors and fostering growth in the digital asset market. The initiatives in the city are aimed at positioning it as a competitor to hubs like Dubai or Singapore as the leading digital asset hub. Consequently, Hong Kong emerges as a potential location close to the wealth originating from mainland China, despite China's prohibition on crypto trading.