Hong Kong Regulator to check crypto firms' compliance
The Securities and Futures Commission (SFC) of Hong Kong has announced its plan to conduct direct compliance reviews on virtual asset trading platforms (VATPs) situated within the city, which are yet to finalize their regulatory submissions after the licensing cut-off date of June 1.
On May 28, through an official notice, the SFC highlighted that every cryptocurrency trading platform operating locally must secure a license or be recognized as “deemed-to-be-licensed” by the said authority before the stipulated deadline of June 1. Post this date, running an unlicensed VATP in Hong Kong is set to be deemed a legal infringement, with the SFC vigilantly targeting entities in breach.
The commission detailed its plans to initiate on-ground assessments of VATPs purported to be licensed, in the ensuing months. These evaluations are designed to scrutinize adherence to regulatory stipulations, with a keen focus on the protection of client funds and the execution of Customer Due Diligence (CDD) procedures.
Alerts and Consumer Safeguard Measures
The governing entity advised investors to engage in cryptocurrency transactions solely on SFC-sanctioned platforms for their safety. It further cautioned aspiring licensed entities against the premature advertisement of their services or the recruitment of new retail customers until they receive their official licenses.
Besides, the SFC cautioned these entities against offering services to residents of mainland China, echoing the mainland’s prohibition on cryptocurrency trades.
This month, observations noted a decline in the number of crypto exchanges applying for operational permits in Hong Kong. Notably, 11 crypto entities and exchanges, including prominent ones like OKX and the local branch of Huobi, called off their applications before reaching the deadline. Currently, 18 applications are in the queue awaiting approval.
In anticipation of the new licensing norms, certain crypto enterprises have taken measures to align with legal requirements. For instance, the crypto exchange Gate.HK halted its user acquisition and promotional efforts, blocked deposits from existing users, and started removing tokens from its listings on May 23. The exchange aims for a revamp and relaunch of its services, tailored to meet Hong Kong’s regulatory standards.
The SFC reported that, to date, only two entities, OSL Digital Securities Limited and Hash Blockchain Limited, have received the green light to operate as licensed entities within Hong Kong.
