Hong Kong Expands Crypto Footprint With Licenses For Four More Exchanges

The Hong Kong Securities and Futures Commission (SFC) doubled the number of licensed virtual asset trading platforms (VATPs). In fact, it granted approvals to four new firms.

New licenses are granted to Accumulus GBA Technology (Hongkong), DFX Labs, Hong Kong Digital Asset EX, and Thousand Whales Technology (BVI). They received their licenses on 18 December 2024, joining existing platforms HashKey, OSL, and HKVAX.

The approvals come under the SFC’s expedited licensing process for “deemed-to-be-licensed” VATP applicants.

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Exchanges Underwent On-Site Inspections

As part of the process, the exchanges underwent on-site inspections. Key regulatory requirements were addressed, such as safeguarding client assets, Know Your Customer (KYC) procedures, and cybersecurity measures.

“We have been proactively engaging with VATPs’ senior management and ultimate controllers which helps drive home our expected regulatory standards and expedite our licensing process for VATPs,” said Eric Yip, SFC’s executive director of intermediaries.

The newly licensed exchanges will initially operate under a restricted scope. They are required to conduct vulnerability assessments and penetration tests with third-party verification before the restrictions can be lifted.

Moreover, the SFC will oversee this process closely. The regulator released a circular outlining its expectations for VATPs.

Currently, all licensed platforms are authorized to trade securities, offer automated trading services, and operate as VATPs. Currently, 11 additional VATPs are on the applicant’s list, seven of which have “deemed-to-be-licensed” status.

JUST IN: 🇭🇰 Hong Kong SFC approves and lists four new #Bitcoin and crypto trading platforms.

China is getting prepared 🙌 pic.twitter.com/in0RdmRGfZ

— Bitcoin Magazine (@BitcoinMagazine) December 18, 2024

The SFC’s website warns users to trade only on licensed platforms. However, it is possible to interact with exchanges that hold “deemed-to-be-licensed” status. The move aligns with the SFC’s broader strategy to regulate and strengthen the crypto trading framework in the region.

SFC CEO Julia Leung said that new licenses would be granted in batches as part of a regulatory roadmap through 2026. The plan aims to enhance oversight, support real-world asset tokenization, and explore blockchain technology’s potential in financial markets.

Hong Kong’s current retail cryptocurrency market remains limited to four available tokens: Bitcoin (BTC), Ether (ETH), Avalanche (AVAX), and Chainlink (LINK).

Retail cryptocurrency trading was officially legalized in August 2023.

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Hong Kong Accelerates Crypto Regulation

Recently, the Hong Kong government announced plans to implement a mandatory crypto asset reporting framework by 2026. 

The proposed crypto asset reporting framework will require tax-paying residents in the country to annually report their crypto accounts and transactions. 

Furthermore, Hong Kong also said it is rolling out a plan to exempt private equity funds, hedge funds, and the investment vehicles of ultra-wealthy individuals from taxes on gains from cryptocurrencies, private credit investments, and other assets.

The proposal claims that taxation is “one of the key considerations” for asset managers when choosing where to base their operations. By creating a “conducive environment,” the Honk Kong government aims to attract global investors and crypto businesses.

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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.
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