Hong Kong’s push to become a digital asset hub faces a roadblock. There is fresh uncertainty as to whether 11 crypto exchanges will all achieve full licences after receiving initial approvals earlier.
🚨🇭🇰#BREAKING: HONG KONG’S #CRYPTO HUB AMBITIONS TESTED AS REGULATORY SCRUTINY INTENSIFIES ON EXCHANGES SEEKING FULL LICENSES👇https://t.co/6LyVsJsaMu
— Blockchain Daily (@blckchaindaily) August 22, 2024
The city’s Securities and Futures Commission (SFC) has discovered unsatisfactory practices at several of the “deemed-to-be-licensed” exchanges during on-site inspections since the pre-approvals were granted in June.
This information comes from people attached to the situation who have asked to remain anonymous.
On-Site Visits By The SFC Has Put Some Applicants At Risk Of Not Being Granted Full Licenses
🚨🇭🇰#BREAKING: HONG KONG’S #CRYPTO HUB AMBITIONS TESTED AS REGULATORY SCRUTINY INTENSIFIES ON EXCHANGES SEEKING FULL LICENSES👇https://t.co/6LyVsJsaMu
— Blockchain Daily (@blckchaindaily) August 22, 2024
It is unclear which of the 11 exchanges fell short of the SFC’s requirements. Crypto.com and Bullish are two more high-profile exchanges attempting to gain full license status in the city.
According to the anonymous sources, the inspections are ongoing and subject to change. The findings add to officials’ mounting challenges to create a flourishing crypto centre within Hong Kong.
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License Applicants Include Global Players Such As Crypto.com
The 11 pre-approved exchanges include global players such as Crypto.com and Bullish. The remainder of the list comprises local firms in HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin, and Matrixport HK.
A spokesperson for the SFC said that while the agency doesn’t comment on the specifics of ongoing cases, the on-site inspections were conducted to ascertain whether applicants adhered to its requirements.
The spokesperson noted that the visits were done “with a particular focus on their safeguarding of client assets and know-your-client processes”.
The spokesperson added that for platforms that cannot correct “critical deficiencies identified during on-site inspections, the SFC may opt to remove their deemed-to-be-licensed status or refuse their license applications. ”
JPEX Scandal: A Key Reason Behind Hong Kong’s Cautious Approach To Licensing Crypto Firms
🚨Taiwanese Singer Nine Chen Faces Charges for Alleged Fraud Involving Hong Kong’s JPEX Exchange
Taiwan singer Nine Chen, aka Chen Lingjiu, has been implicated in a major fraud case linked to Hong Kong's JPEX cryptocurrency exchange. pic.twitter.com/RhzWkW7sut
— Jimmy carwal (@jimm74384) June 28, 2024
Hong Kong has taken a cautious approach to licensing crypto firms. This is partly due to a major scandal involving a crypto exchange, JPEX.
It has led officials to prioritize investor protection over the city’s push to become a major crypto hub. According to the local authorities, the alleged JPEX scam affected over 2600 victims, with a reported loss of $1.6 billion HK ($270 million USD).
The 11 exchanges vying for full-license status are forbidden from onboarding new clients until they are granted full licenses. If rejected, applicants would need to restart the submission process from the beginning.
Full licenses will be issued toward the end of 2024 for firms that satisfy all SFC requirements. SFC CEO Julia Leung confirmed this in June.
Only two crypto platforms (OSL and HashKey) are currently fully licensed in Hong Kong. Before Hong Kong introduced its licensing requirements, those in operation were allowed to remain open for business while applying for a license.
Non-applicants were required to exit the market by the end of May.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
