The Hong Kong SFC is expected to issue licenses to 11 cryptocurrency exchanges by the end of this year to boost its status as a financial and technology hub.
On October 6, the Hong Kong Securities and Futures Commission (SFC) announced plans to issue more operating licenses for cryptocurrency exchanges and digital asset companies in the near future. This is seen as an important step in Hong Kong's efforts to strengthen its position as a leading financial and technology center, particularly in the digital asset sector.
According to Julia Leung, CEO of the SFC, the agency is in the process of reviewing and expects to make progress in issuing licenses to 11 Virtual Asset Trading Platforms (VATPs) on the potential list. Currently, a total of 16 companies are awaiting VATP license approval, with 11 of them currently operating in a "deemed licensed" status but not yet officially recognized by the SFC.
Efforts to strengthen management and supervision of the cryptocurrency market
The licensing process will be carried out in batches to ensure the exchanges fully comply with strict regulations. Leung stated that all VATPs that comply with the SFC's licensing model can expect their applications to be approved.
Leung's comments were made on the same day the SFC announced its development roadmap for 2024-2026, which includes plans to enhance regulations on cryptocurrency platforms, develop Real-World Asset (RWA) tokenization, and further explore blockchain technology.
The move comes as Hong Kong is working to strengthen the management and supervision of the cryptocurrency market following the scandal involving the Dubai-based JPEX exchange. The incident, which caused an estimated $165 million in losses, affected more than 2,500 investors in Hong Kong.
Previously, Hong Kong had faced criticism for its slow progress in establishing regulations related to cryptocurrencies, despite its ambitions to become a global cryptocurrency hub. Currently, retail investors in Hong Kong are only allowed to trade 4 types of cryptocurrencies.
However, Leung said the legal framework for digital assets is expected to be finalized by the end of 2024. The licensing of HKVAX, the third cryptocurrency exchange to be licensed in Hong Kong after OSL and HashKey, also demonstrates the government's determination to drive the development of this market.
After the JPEX scandal, the SFC has set up a task force in collaboration with the police to handle illegal cryptocurrency trading activities. The agency has also updated its policies on cryptocurrency sales and requirements for companies operating in the industry.
