Hong Kong's financial regulator, the Securities and Futures Commission (SFC), plans to issue additional licenses to cryptocurrency exchanges and digital asset firms by the end of the year.
SFC CEO Julia Leung, in an 6 October report by HK01, noted that licenses will be issued to 11 Virtual Asset Trading Platforms (VATPs) currently operating under the "deemed to be licensed" status.
Leung emphasized that these licenses will be granted in batches, allowing platforms to more easily comply with regulatory standards.
A total of 16 companies await a decision on their applications, and the SFC has already conducted its initial round of on-site reviews.
Firms that meet the regulator's requirements will have their licenses approved, while non-compliant platforms will lose eligibility.
As to how many platforms have applied, one page on lists 11 applicants for the licensing regime, but another lists 16.
On 6 October as well, the SFC unveiled its roadmap for 2024 to 2026, outlining plans to strengthen regulations for crypto platforms, promote the tokenisation of Real World Assets (RWA), and further explore blockchain technology.
Currently, retail crypto investors in Hong Kong are limited to purchasing just four cryptocurrencies, leading to criticism over the slow pace of regulatory development, despite the city's ambitions to become a global hub for crypto and fintech.
However, Leung expressed confidence that the regulatory framework for crypto assets will be finalised by the end of next year.
The recent update on crypto licenses follows the approval of HKVAX, the third exchange licensed to operate in Hong Kong, joining OSL and HashKey, which received their licenses in 2020 and 2023, respectively.
Hong Kong's focus on licensing and regulation intensified after the 2023 collapse of Dubai-based crypto exchange JPEX, which defrauded over 2,500 Hong Kong residents of $165 million.
JPEX promoted heavily in Hong Kong before abruptly raising withdrawal fees and blocking users from accessing their funds.
In response, Hong Kong committed to strengthening crypto regulations and cracking down on unlicensed firms.
The SFC, in collaboration with the police, has formed a task force to address illicit activities in the sector.
The SFC also updated its policies on crypto sales and licensing requirements, with further approvals anticipated despite criticisms that its regulatory regime may be overly stringent for the city's ambitions as a crypto and Web3 hub.
Additionally, the SFC has sought industry input on regulations for cryptocurrency OTC and custody services.
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