Hong Kong’s SFC to Approve New Batch of Crypto Licenses by Year-End

The Hong Kong Securities and Futures Commission (SFC) is set to approve a new batch of crypto licenses by the end of this year. Currently, 11 virtual asset trading platforms (VATPs) are under consideration for these licenses.

In an interview with Hong Kong 01, China Securities Regulatory Commission (CSRC) CEO Liang Fengyi confirmed that the SFC will issue licenses in phases, aimed at regulating the burgeoning cryptocurrency sector. Earlier this year, the SFC granted three licenses to prominent exchanges: Hong Kong Virtual Asset Exchange, OSL Exchange, and HashKey Exchange.

Beyond these, 11 more platforms have applied for approval and are undergoing regulatory reviews. According to Fengyi, the initial on-site inspections have been completed, with applicants instructed to make necessary adjustments to meet regulatory standards. She emphasized the SFC’s goal to make considerable progress in regulating virtual assets by issuing a new set of licenses before the end of 2024.

“Applicants who fail to meet the requirements will lose their eligibility for licensing, while those who comply will be granted conditional licenses,” Fengyi said.

Looking forward, the SFC’s strategy for 2024-2026 aims to advance virtual asset regulations, encourage the tokenization of traditional products, and leverage regional blockchain technology alongside Web3 innovations. The complete regulatory framework is expected to be finalized by 2025.

Additionally, the SFC has introduced a new licensing regime for over-the-counter (OTC) cryptocurrency custody services. This move is intended to gather feedback from industry participants and enhance oversight of the sector.

In September 2024, the SFC began collaborating with the Hong Kong Customs and Excise Department to issue licenses for OTC crypto trading services. Many platforms had previously faced challenges in securing licenses due to deficiencies in client asset management and cybersecurity protocols.

On September 30, ZA Bank became the first virtual assets bank in Hong Kong to receive an SFC license after a year-long review process. The regulatory framework in Hong Kong has become increasingly stringent, with licenses now essential for crypto platforms to operate within the region’s growing regulated ecosystem.

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