Hong Kong crypto investors have to act fast and verify the licensed platforms they are trading on, as the regulators have set a deadline for the virtual asset trading platforms to obtain licenses or cease operations. The move is part of Hong Kong‘s regulatory overhaul to ensure investor protection and compliance.
Hong Kong’s crypto landscape is undergoing a seismic shift, as the regulators have issued an ultimatum to the virtual asset trading platforms and their users. Investors have to act fast and verify the licensed platforms they are trading on or face the risk of losing access to their funds and accounts.
The ultimatum is set by the China Securities Regulatory Commission (CSRC), the main securities regulator in China, which also oversees the Hong Kong market. The CSRC has delegated the supervision of the virtual asset trading platforms to the Securities and Futures Commission (SFC), the local securities regulator in Hong Kong.
The move is part of Hong Kong’s regulatory overhaul to ensure investor protection and compliance in the crypto space. The overhaul follows the enactment of the Anti-Money Laundering (AML) Ordinance, which requires virtual asset trading platforms to obtain licenses from the SFC or cease operations in Hong Kong.
The SFC has issued a stern reminder, urging investors to scrutinize the regulatory standing of the virtual asset trading platforms they are using. The SFC advises investors to meticulously check the “List of Licensed Virtual Asset Trading Platforms” and the “List of Applicants for Virtual Asset Trading Platforms” on its website.
The CSRC and the SFC officially sanction platforms on the licensed list and are subject to ongoing supervision and inspection. Platforms on the applicant’s list are those that have submitted license applications on or before February 29, 2024, and are still under review by the SFC.
According to the SFC, the investors must act swiftly, as the transitional arrangements indicate that virtual asset trading platforms failing to submit a license application by February 29, 2024, will be required to cease operations in Hong Kong by May 31, 2024. A key date to mark on the calendar is March 1, 2024, when the regulatory landscape is set to witness significant changes.
In addition, the traders are strongly advised to conduct periodic checks on the regulatory status of their chosen platforms. If a platform is not on the approved lists, necessary preparations, such as account closure or transferring to a licensed platform, should be made before the looming May 31, 2024 deadline.
In other words, the SFC urges investors to trade exclusively on SFC-licensed platforms, highlighting the risks associated with unlicensed platforms where investor protection may be compromised.
The SFC warns that unlicensed platforms may be involved in illegal activities, such as money laundering, fraud, or market manipulation, and that investors may not have any recourse or compensation in case of disputes or losses.
The regulatory overhaul is backed by legal ramifications, according to the AML Ordinance. The ordinance stipulates that virtual asset trading platforms must submit license applications by February 29, 2024, to continue operations in Hong Kong beyond June 1, 2024. Failure to comply could result in criminal offenses, both for operating without a license and actively promoting services to Hong Kong investors without proper authorization.
The ordinance also imposes various obligations and requirements on the licensed platforms, such as conducting customer due diligence, keeping records, reporting suspicious transactions, and implementing internal controls.
Hong Kong’s SFC has the power to impose sanctions and penalties on the licensed platforms for any breaches or violations.
Meanwhile, investors are cautioned against assuming that platforms on the “List of Virtual Asset Trading Platform Applicants” are licensed or regulated by the CSRC or the SFC. These platforms may face rejection or return of their applications, potentially leading to closure and inclusion in the “List of Closed Virtual Asset Trading Platforms.”
The SFC advises investors to exercise caution and vigilance when dealing with these platforms and to be aware of the risks and uncertainties involved. The regulator also encourages investors to report any suspected illegal or fraudulent activities to the relevant authorities.
