May 31, 2024
By Sharan Kaur Phillora
The Hong Kong Securities and Futures Commission (SFC) has announced plans to conduct on-site inspections of local virtual asset trading platforms (VATPs) that are still processing their regulatory applications after the June 1 licensing deadline.
Here’s what we know:
On May 28, the SFC reminded crypto companies of their obligation to secure a license before the deadline. Post-deadline, all local crypto trading platforms must either be fully licensed or classified as “deemed-to-be-licensed” by the SFC.
Before the new licensing regime was implemented, the “deemed-to-be-licensed” status applied to crypto firms already operating in Hong Kong. Operating an unlicensed VATP in Hong Kong after June 1 constitutes a criminal offense, prompting the SFC to monitor compliance closely.
“In the coming months, whilst the deemed-to-be-licensed VATP applicants pursue their applications, the SFC will conduct on-site inspections to ascertain their compliance with the SFC’s regulatory requirements,” stated the SFC. The inspections will particularly focus on how these firms safeguard client assets and execute Know Your Customer (KYC) processes.
The SFC also urged investors to trade only on SFC-licensed platforms and warned companies seeking licenses not to “actively market services or onboard new retail clients until formally licensed.” Additionally, firms must prevent mainland Chinese residents from accessing their services.
Earlier in May, several crypto exchanges withdrew their applications for operational licenses in Hong Kong. Eleven companies, including OKX and Huobi’s local arm, pulled out ahead of the deadline, leaving 18 applications pending. Crypto Exchange Gate.HK ceased all activities related to new user acquisition and marketing, restricted existing users from making deposits, and began delisting tokens on May 23. After restructuring its platform to meet Hong Kong’s regulatory standards, the exchange plans to relaunch.
According to the SFC, only two companies, OSL Digital Securities Limited and Hash Blockchain Limited, have been granted licenses to operate in Hong Kong to date.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
