Hong Kong’s Securities and Futures Commission is expected to issue licenses to some of the 11 cryptocurrency companies waiting to be registered in the territory.
Hong Kong’s financial regulator, the Securities and Futures Commission, said it expects to issue more licenses to cryptocurrency exchanges and digital asset firms operating in the territory by the end of the year.
Hong Kong Securities and Futures Commission CEO Leung Fung-yee said she expects the SFC to “make progress” in issuing licenses to the 11 currently operating virtual asset trading platforms (VATPs) on the regulator’s list of potential licensees, local media HK01 reported on Oct. 6. She added that licenses will be issued “in batches” in the future to make it easier for cryptocurrency exchanges to comply with regulations.
A total of 16 companies are awaiting the results of their VATP applications. Although the SFC discourages traders from doing business with these companies, 11 of them are already operating as “deemed licensed”.
Leung added that it has completed its first round of “on-site” reviews of cryptocurrency companies and said all applications from VATP that meet its licensing model are expected to be approved.
Leung Chun-ying said that all companies that do not meet the requirements of the SFC may lose their licensing qualifications.
Leung's remarks came as the Hong Kong Securities and Futures Commission released its development roadmap for 2024 to 2026 on October 6, planning to advance the regulation of crypto platforms, promote the tokenization of real-world assets (RWA), and explore blockchain technology more thoroughly.
Retail cryptocurrency investors in Hong Kong can currently only buy four cryptocurrencies, and despite Hong Kong's repeated declarations that it wants to become a world hub for cryptocurrencies and financial technology, its slow pace of cryptocurrency regulation has been criticized.
However, Liang said he expects the regulatory framework for crypto assets to be completed by the end of next year.
The cryptocurrency license update came three days after the approval of cryptocurrency exchange HKVAX, which is the third exchange to obtain a Hong Kong trading license after OSL and HashKey were awarded licenses in 2020 and 2023, respectively.
Hong Kong has made licensing and regulation of cryptocurrency companies a priority following the $165 million scandal in 2023 involving the now-defunct Dubai-based cryptocurrency exchange JPEX.
More than 2,500 Hong Kong residents claim they were defrauded by the exchange, which heavily promoted its services in Hong Kong but raised withdrawal fees and blocked users from accessing their funds in September this year.
After the scandal broke out, Hong Kong said it would strengthen cryptocurrency regulation and supervision of unlicensed companies. In addition, the Hong Kong Securities and Futures Commission and the police set up a special task force to deal with illegal cryptocurrency trading activities and updated the policies on cryptocurrency sales and requirements.
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