This week Hong Kong's Securities and Futures Commission (SFC) published a list of 11 virtual asset trading platforms (VATPs) applicants who can continue to operate under Hong Kong VATP regulatory regime pending determination of their licence applications. According to the SFC's website, these applicants are now "deemed to be licensed" as of 1 June 2024.
Major exchanges such as Crypto.com are among this list of 11, which can now continue to operate in Hong Kong pending formal decisions on their licence applications. Exchanges were given a 1 June deadline to submit an application, otherwise they must close down business in Hong Kong, and stop actively marketing their services to Hong Kong investors.
The SFC emphasised that applicants who are "deemed-to-be-licensed" have not yet been formally approved:
All VATP applicants on this list are NOT licensed by the SFC, and may NOT be in compliance with the SFC’s requirements. It should also be noted that the SFC has NOT formally licensed the deemed-to-be-licensed VATP applicants.
The SFC clarified its purpose of publishing the list is:
to enable any member of the public to ascertain whether a virtual asset trading platform has made untrue or misleading misrepresentations regarding its licence application status with the SFC.
It also said that VATP applicants which appear on this list may not eventually be granted licences. SFC may update the list at any time if:
licence applications have been returned by the SFC due to them being incomplete and/or having unresolved fundamental issues; and
licence applications have been refused by the SFC or withdrawn by the VATP applicants.
It was reported that the conditional approval comes as a relief to many industry watchers one week after several other major global exchanges withdrew their applications from consideration, which led observers to question whether Hong Kong would offer a hospitable environment to cryptoasset firms. So far, only two VAPTs have received full approval from the SFC - being OSL Exchange and HashKey Exchange.
In the past two years Hong Kong has taken significant strides towards regaining Asia's crypto crown. Notable efforts by the Hong Kong government include establishing the VATP regulatory framework and formulating guidance on asset tokenisation.
The SFC’s comprehensive regulatory framework and world-renowned financial regulators have been held up by many observers as an example of a regulatory ecosystem that could facilitate the growth of a mature crypto industry in Asia. The latest licensing developments however underscore some of the challenges that many of exchanges will face in transitioning their business to new licensing frameworks being developed around the world.
Written by J Huang and S Pettigrove
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