KeyTakeaways:
- Hong Kong grants provisional licenses to four new crypto exchanges, totaling seven licensed platforms.
- Exchanges must meet further regulatory requirements before full licensing in second phase.
- Hong Kong’s swift licensing process attracts crypto firms while ensuring investor protection.
Hong Kong is continuing its efforts to position itself as a global crypto hub, as the Hong Kong Securities and Futures Commission (SFC) recently approved four new virtual asset trading platforms (VATPs) under its swift licensing process.
This brings the total number of licensed exchanges in the city to seven. However, these exchanges must still pass additional regulatory hurdles before fully operating without restrictions. The swift licensing process is designed to speed up approvals, a response to the growing demand for clearer and more efficient crypto regulations in the region.
On Dec 19, the SFC announced that four new firms had passed initial inspections and were granted provisional approval to operate under the first phase of the licensing process.
These platforms, Accumulus GBA Technology Co Ltd, DFX Labs Co Ltd, Hong Kong Digital Assets EX Ltd, and Thousand Whales Technology Ltd, are now authorized to conduct business within a restricted scope while working on meeting further regulatory requirements.
The swift licensing process was established to help virtual asset platforms begin operating more quickly while ensuring they meet the SFC’s standards. This streamlined approach aims to balance fostering innovation in the crypto space and maintaining investor protection.
The Next Steps for Full Licensing
Despite receiving initial approval, these exchanges still need to clear the second phase of the regulatory process. This stage assesses whether the exchanges’ internal policies, systems, and procedures align with regulatory requirements.
Additionally, platforms must undergo assessments to ensure their compliance with anti-money laundering (AML) and counter-financing terrorism (CFT) rules.
In line with the SFC’s updated approach, the second phase will involve a more direct engagement between regulators and the exchanges’ senior management. A certified public accountant will also be required to verify that the platform’s policies are in line with the guidelines set for VATPs.
Hong Kong’s Growing Crypto Landscape
The recent approvals signal Hong Kong’s ongoing efforts to expand its crypto market and enhance regulatory clarity. Since implementing the swift licensing process, the city has already seen approvals for other platforms like OSL, HKVAX, and HashKey earlier this year.
However, the complexity of the licensing process has led some major exchanges, including OKX, to withdraw from the market.
While several applications are still under review, the SFC’s swift licensing strategy addresses these challenges and makes Hong Kong an attractive destination for crypto businesses.