A regulator in Hong Kong has expressed dissatisfaction with the ongoing examinations of cryptocurrency exchanges awaiting full licensing in the region.
The city’s regulator has granted initial approvals to certain applicants; however, completion of the licensing process is contingent upon complete adherence to SFC’s regulations.
The Hong Kong Securities and Futures Commission (SFC) discovered that a few crypto exchanges that are “deemed to be licensed” are not effectively managing cybercrime risks during on-site scrutiny.
Bloomberg cited sources that did not identify others disproportionately reliant on a few executives to oversee client assets’ custody.
A short-term framework is in place for deemed-to-be-licensed applicants, which are crypto firms already operating in the region before the implementation of the licensing regime.
The SFC announced that it would actively prosecute companies that violate the regulation, as operating an unlicensed virtual asset trading platform (VATP) in Hong Kong became a criminal offence on June 1.
Crypto.com, Bullish, HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin, and Matrixport HK are among the crypto exchanges that have not yet received complete operational licenses in Hong Kong.
Nevertheless, the Bloomberg source did not furnish the inventory of exchanges that did not satisfy all of the regulator’s requirements.
The spokesperson informed Bloomberg that the SFC may choose to revoke the deemed-to-be-licensed status of platforms that cannot address “critical deficiencies identified during on-site inspections” or refuse their license applications.
Hong Kong aims to become global fintech centre
Hong Kong declared its intention to enhance cryptocurrency regulations within the next 18 months to establish itself as a global financial technology centre earlier this month.
David Chiu, a member of the Legislative Council of the Hong Kong Special Administrative Region, delineated the city’s strategic objectives to attract technology professionals, construct new infrastructure, and establish effective legislative oversight. Chiu elaborated on the strategy, stating:
“The digital asset industry has made significant progress in the past few years, but we are still in a very early stage. We should establish a sound exchange system and soon introduce legislation related to stablecoins.
New regulations to attract investors
The city has been attempting to entice investors and crypto exchanges to participate in the new licensing regime since June last year when the Hong Kong SFC published proposed rules for virtual asset trading platforms.
The only wholly licensed crypto platforms in Hong Kong are OSL and HashKey. OKX, Bybit, and Huobi HK are among the exchanges that have withdrawn their applications.
