August 28, 2024
By Anjali Kochhar
Hong Kong’s Securities and Futures Commission (SFC) has uncovered several “unsatisfactory practices” among crypto entities seeking full licenses to operate in the region, according to media reports. The regulator’s ongoing inspections have highlighted concerns over the reliance on a limited number of executives for overseeing client asset custody and inadequate safeguards against cybercrime risks.
As many as 11 entities are currently in the process of applying for a full license with the SFC, including prominent names like Crypto.com, HKbitEX, PantherTrade, and Bullish. The report, however, did not specify which of these entities were found to have “critical deficiencies.” The SFC has emphasised that platforms failing to address these issues may face serious consequences, including the loss of their deemed-to-be-licensed status or outright refusal of their license applications.
An SFC spokesperson mentioned that inspections are still ongoing and subject to change, but declined to comment on specific cases. The spokesperson added that for those platforms unable to correct significant deficiencies identified during these on-site inspections, the SFC might consider rejecting their license applications or revoking their provisional licenses.
The SFC’s heightened scrutiny comes as Hong Kong aims to establish itself as a global hub for cryptocurrency. Earlier this year, the city approved the trading of spot-crypto products, marking a significant step in its ambitions to become a leading player in the global crypto market. However, the recent findings could hinder this progress.
In a move that may reflect the challenges of meeting the SFC’s stringent requirements, 12 entities, including major players OKX and ByBit, have already withdrawn their license applications. Currently, only OSL and HashKey have secured full licenses from the SFC, making them the only fully regulated crypto exchanges in Hong Kong.
The SFC has not provided additional information regarding the entities under investigation, and none of the named applicants has replied to demands for comment. The developments highlight the regulatory obstacles that crypto businesses face as they traverse the complicated terrain of compliance in one of Asia’s main financial centres.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
