Hong Kong targets noncompliant crypto exchanges in licensing push

Pradipta Mukherjee11 hours agoHong Kong targets noncompliant crypto exchanges in licensing pushHong Kong’s SFC finds deficiencies in some “deemed-to-be-licensed” crypto exchanges, risking their licensing status amid tightened regulations.842 Total views2 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTCOINTELEGRAPH IN YOUR SOCIAL FEEDFollow ourSubscribe onA Hong Kong regulator has expressed dissatisfaction with ongoing inspections of cryptocurrency exchanges waiting to be fully licensed in the region. Some applicants received initial approvals from the city’s regulator but are yet to be fully licensed, subject to total compliance with the Hong Kong Securities and Futures Commission’s (SFC) requirements. 

During on-site scrutiny, the SFC found that a few crypto exchanges that are “deemed to be licensed” are not managing cybercrime risks appropriately. Others are excessively dependent on a handful of executives to supervise the custody of client assets, a Bloomberg report said, citing sources it did not identify. 

Deemed-to-be-licensed applicants fall under a short-term framework designed for crypto firms operating in the region before the licensing regime was enacted.

Starting June 1, operating an unlicensed virtual asset trading platform (VATP) in Hong Kong became a criminal offense, and the SFC said it would actively pursue companies violating the regulation.

Crypto exchanges that have yet to receive full operational licenses in Hong Kong include Crypto.com, Bullish, HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin and Matrixport HK.List of virtual asset trading platform applicants in Hong Kong. Source: Securities and Futures Commission

Related:Hong Kong flags 7 unregulated crypto exchanges for noncompliance

However, the Bloomberg source did not provide the list of exchanges that did not meet all the regulator’s requirements. 

For platforms that are unable to remedy “critical deficiencies identified during on-site inspections, the SFC may opt to remove their deemed-to-be-licensed status or refuse their license applications,” the spokesperson told Bloomberg. Hong Kong aims to become global fintech hub

Earlier this month, Hong Kong announced its intention to improve crypto regulations within the next 18 months as it aims to become a global hub for financial technology. 

David Chiu, a member of the Legislative Council of the Hong Kong Special Administrative Region, outlined the city’s strategic plans to attract technology talents, build new infrastructure, and establish robust legislative supervision. Elaborating on the strategy, Chiu said:“The digital asset industry has made significant progress in the past few years, but we are still in a very early stage. We should establish a sound exchange system and soon introduce legislation related to stablecoins.”New rules to lure investors

Since June last year, when the Hong Kong SFC published draft rules for virtual asset trading platforms, the city has been trying to lure investors and crypto exchanges to be part of the new licensing regime. 

As of now, crypto platforms OSL and HashKey are the only two fully licensed in Hong Kong. Other exchanges, including OKX, Bybit and Huobi HK, have withdrawn their applications. 

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