Hong Kong is approving more crypto exchanges, aiming to attract institutional and retail investors with clearer regulations.
Despite regulatory advancements, strict approval processes have led major exchanges like OKX and Bybit to withdraw their applications.
The SFC’s oversight is evolving, but slow regulation and high-profile exchange failures, like JPEX, are raising investor concerns.
The approval of new Bitcoin and cryptocurrency exchanges this year is anticipated to cause change in Hong Kong's regulatory stance. Julia Leung, CEO of the Securities and Futures Commission, has announced that eleven candidates have finished their in-person assessments.
In addition to improving security, the SFC's inclusion in the licensing procedure demonstrates Hong Kong's will to maintain its position as a leading financial center. Furthermore, additional participants are anticipated to enter the market as a result of the increase of cryptocurrency exchange licenses, providing much-needed regulatory clarity.
https://twitter.com/BitcoinMagazine/status/1843616025692254419 New Licensing Rules and Market Impact
Institutional and individual investors will have more options thanks to the granting of new licenses. Institutional investors have previously been deterred from entering the market by regulatory uncertainty in other jurisdictions; however, Hong Kong is easing this barrier by establishing clear norms. Furthermore, it is anticipated that these new rules would increase the confidence of regular investors, which may accelerate the adoption of cryptocurrencies in the area.
However, despite these advancements, the stringent approval process has been met with criticism. Critics argue that the lengthy and complex procedures could stifle Hong Kong’s ambition to be a global crypto hub. Earlier this year, major exchanges like OKX and Bybit withdrew their applications due to SFC requirements that restricted mainland Chinese residents from using their services.
Challenges and Future Outlook
Despite these challenges, the SFC remains optimistic. Leung stated that the regulatory framework would be fully implemented by next year. However, concerns persist over the slow pace of crypto regulation, which has frustrated both industry players and investors. Currently, Hong Kong only has three licensed exchanges—HKVAX, OSL Exchange, and HashKey Exchange.
Furthermore, concerns regarding the region's regulatory procedures have been raised by the recent collapse of JPEX, which duped investors in Hong Kong of $200 million. In response, the SFC has increased openness and offered advice on how to properly supervise custody and over-the-counter (OTC) trading procedures.
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