Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), said it expects to issue more licenses to cryptocurrency exchanges and digital asset companies operating in the region before the end of the year.
SFC CEO Julia Leung said she expects “progress” in granting licenses to 11 existing Virtual Asset Trading Platforms (VATPs) that are on the regulator’s list of potential candidates, according to a report from local newspaper HK01 on October 6.
She added that the licenses will be issued “in batches” to make it easier for crypto exchanges to come into compliance.
A total of 16 companies are awaiting a decision on their VATP applications. Eleven have been operating as “deemed licensed,” although the SFC discourages traders from doing business with them.
Ms Leung added that they have completed the first round of “fact checks” for crypto companies and said all VATPs that comply with their licensing model can expect their applications to be approved.
Ms Leung said any companies that fail to meet the SFC's requirements could expect to lose their licensing eligibility.
Leung's comments come as the SFC released its roadmap for 2024 to 2026 on October 6, with plans to promote regulation on cryptocurrency platforms, encourage the tokenization of Real World Assets (RWA), and further explore blockchain technologies.
Retail cryptocurrency investors in Hong Kong can currently only buy four cryptocurrencies, and Hong Kong has been criticized for its slow pace in finalizing cryptocurrency-related regulations despite repeatedly declaring its intention to become a world hub for cryptocurrencies and financial technology.
However, Ms. Leung said she expects the regulatory framework for crypto assets to be completed before the end of next year.
The crypto licensing update comes just three days after HKVAX exchange became the third entity to be licensed to trade in Hong Kong, following OSL and HashKey being licensed in 2020 and 2023, respectively.
Hong Kong has made licensing and regulation of cryptocurrency companies a top priority following a $165 million scandal involving now-defunct Dubai-based cryptocurrency exchange JPEX, due in 2023.
More than 2,500 Hong Kong residents claim they were scammed by the exchange, which promoted its services aggressively in Hong Kong before raising withdrawal fees in September and blocking users from accessing their accounts.
In the wake of the scandal, Hong Kong announced it would strengthen cryptocurrency regulation and increase oversight of unlicensed companies. The SFC also set up a task force with the police to tackle illegal cryptocurrency exchange activities and updated its policy on cryptocurrency sales and inquiries.
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