What Comes Next as Hong Kong’s Securities and Futures Commission Strengthens Crypto Market through New Licensing Regulations?

The Securities and Futures Commission (SFC) of Hong Kong has received applications for a crypto license from 22 major players in the industry, including Crypto.com and OKX. This follows the introduction of a licensing system for Virtual Asset Service Providers (VASPs) in December 2022, as part of an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). The SFC has now stopped accepting license applications from cryptocurrency exchanges, with the deadline for applying being February 29. Non-compliant exchanges must close by May 31, 2024, and investors are encouraged to switch to licensed platforms. Currently, licensed exchanges can only trade Bitcoin and Ether, but other cryptocurrencies and stablecoins are under review. So far, only two companies, OSL Exchange and HashKey Exchange, have been granted licenses. The 22 applicants on the list will undergo rigorous compliance checks and may be approved if they meet SFC requirements. The SFC will release a list of licensed crypto exchanges on June 1, 2024. In a surprising move, cryptocurrency trading platform HTX (formerly Huobi Global) has withdrawn its license application in Hong Kong. The withdrawal was made by HBGL Hong Kong Limited, a subsidiary of HTX, just three days after the application was submitted. The SFC is currently in the process of approving licenses and the applicants are eagerly awaiting the outcome of their applications.