Hong Kong aims to become a leading cryptocurrency hub, but over a dozen exchanges face challenges in obtaining full licenses.
Current Licensing Situation
According to Bloomberg, cryptocurrency exchanges in Hong Kong are struggling to obtain full licenses despite the city's efforts to become a crypto hub. Only two platforms — OSL and HashKey — currently hold full licenses in Hong Kong. Meanwhile, 12 applications for licenses have already been withdrawn, including those from major players like Bybit, Huobi HK, and OKX.
Issues Identified by Regulators
Hong Kong’s Securities and Futures Commission has identified concerning practices during on-site inspections of 11 'deemed-to-be-licensed' exchanges. Issues include inadequate protection of client assets and insufficient measures to safeguard against cybercrime risks. Significant players like Crypto.com and Bullish, as well as local trading platforms such as HKbitEX and PantherTrade, have come under scrutiny.
Proposed Regulatory Changes
In February, the Hong Kong government released a public consultation document proposing stricter regulations on over-the-counter cryptocurrency trades. These new regulations aim to limit OTC trades to spot transactions of digital assets for fiat currency. Digital asset trading will be governed under the standard Virtual Asset Trading Provider (VATP) license, while peer-to-peer (P2P) trading will be classified separately from OTC.
Hong Kong’s aspirations to become a leading cryptocurrency hub face significant regulatory challenges. Stringent licensing requirements and new regulations could greatly impact the operations of cryptocurrency exchanges in the region.
Comments