Hong Kong's SFC plans to license 11 cryptocurrency exchanges by the end of this year in a bid to boost its status as a financial and technology hub.
On October 6, the Hong Kong Securities and Futures Authority (SFC) announced plans to issue more licenses to cryptocurrency exchanges and digital asset companies in the near future. This is considered an important step in the effort to strengthen Hong Kong's position as a leading financial and technology center, especially in the field of digital assets.
According to Julia Leung, CEO of the SFC, the agency is in the process of reviewing and is expected to make progress in licensing 11 potential Virtual Asset Trading Platforms (VATPs). Currently, there are a total of 16 companies awaiting approval of their VATP license applications, of which 11 are operating as “deemed licensed” but not yet officially recognized by the SFC.
Efforts to strengthen management and supervision of the cryptocurrency market
The licensing will be done in batches to ensure that exchanges fully comply with strict regulations. Ms. Leung affirmed that all VATPs that comply with the SFC's licensing model can expect their applications to be approved.
Ms Leung's comments came on the same day the SFC released its 2024-2026 roadmap, which includes plans to promote regulation of cryptocurrency platforms, develop the tokenization of Real Assets (RWA), and further explore blockchain technology.
The SFC has listed four top priorities in its 2024-2026 roadmap. Source: SFC Hong Kong
The move comes as Hong Kong is stepping up efforts to regulate and monitor the cryptocurrency market following a scandal involving Dubai-based exchange JPEX, which lost an estimated $165 million and affected more than 2,500 investors in Hong Kong.
Hong Kong has previously faced criticism for its slow progress in establishing cryptocurrency regulations, despite repeatedly declaring its desire to become a global cryptocurrency hub. Currently, retail investors in Hong Kong are only allowed to trade four cryptocurrencies.
However, Ms. Leung said that the legal framework for crypto assets is expected to be completed by the end of 2024. The licensing of HKVAX, the third cryptocurrency exchange licensed to operate in Hong Kong after OSL and HashKey, also shows the government's determination to promote the development of this market.
Following the JPEX scandal, the SFC established a task force in conjunction with the police to tackle illegal cryptocurrency trading activities. At the same time, the agency also updated its policies on cryptocurrency sales and requirements for companies operating in the industry.