Hong Kong SFC to Issue More Crypto Licenses by Year-End

Key Takeaways

• In addition to HKVAX, 11 other platforms are under review for licenses from the SFC
• HKVAX will offer services that include over-the-counter trading, exchange operations, and custody solutions. 

The Hong Kong Securities and Futures Commission (SFC) is preparing to grant additional licenses to cryptocurrency businesses by the close of 2024, according to an October 7 report from local news outlet Hong Kong 01. This comes after the recent approval of HKVAX, marking it as the third licensed crypto exchange in Hong Kong.

Julia Leung, Chief Executive of the SFC, confirmed the license during an interview with HK01. HKVAX joins the ranks of other licensed exchanges like OSL and HashKey, both of which are already active in the region.

HKVAX will offer services that include over-the-counter (OTC) trading, exchange operations, and custody solutions. Commenting on the approval, HKVAX co-founder and CEO Anthony Ng stated, “This approval affirms HKVAX’s position and demonstrates Hong Kong’s commitment to being at the forefront of the virtual asset industry.”

In addition to HKVAX, 11 other platforms are under review for licenses from the SFC. Leung indicated that these companies are on the “deemed-to-be-licensed” list, meaning they have already submitted their applications under the new regulatory system. The SFC has conducted inspections of these firms and instructed them to make any necessary adjustments to meet regulatory compliance standards.

Leung emphasized the importance of regulatory oversight, noting, “We have conducted inspections and asked the firms to address issues that do not meet our regulatory expectations.” These ongoing inspections are part of the SFC’s efforts to ensure full compliance before granting final approvals.

However, some exchanges have opted to withdraw their applications. HKVAEX, suspected of having ties to Binance, pulled its application in March 2024. Similarly, other platforms like IBTCEX, Huobi HK, and Bybit withdrew in May 2024. Meanwhile, platforms such as Bullish and Crypto.com are still awaiting the SFC’s decision.

The SFC has made it clear that firms failing to meet regulatory requirements will lose their “deemed-to-be-licensed” status. “Applicants who do not meet the requirements will lose their qualifications for licensing, while applicants who meet the requirements will be granted a license conditionally,” Leung stated.

The SFC plans to issue licenses in phases, allowing firms to gradually enter the market under the new regulations. The commission is also looking ahead to advancing regulations for virtual assets, promoting tokenization of traditional assets, and exploring blockchain technologies and Web3 innovations through 2026.

For over-the-counter (OTC) services, Leung mentioned that a new licensing system has been introduced for custody services, with feedback being gathered from industry participants to refine the approach.