In a report by Todayq News on February 20, 2023, Hong Kong’s Securities and Futures Commission (SFC) introduced a licensing regime for cryptocurrency exchanges. The SFC aimed to mandate licenses for centralized exchanges, focusing on robust investor protection measures. The proposed guidelines were aligned with existing securities broker requirements and covered areas such as asset custody, KYC, cybersecurity, and AML/CFT. This move was in response to industry turmoil and aimed to ensure clear regulations in the cryptocurrency ecosystem.
Now, the Hong Kong Securities and Futures Commission has raised concerns about unlicensed cryptocurrency exchanges engaging in improper practices. They have firmly stated that engaging in unlicensed crypto activities constitutes a criminal offense within the city. In some cases, unlicensed platforms falsely claim that they have applied for licenses, creating a deceptive environment.
The commission has made it explicitly clear that deceiving others with fraudulent or reckless misrepresentations to encourage virtual asset trading is strictly prohibited. Moreover, they have highlighted that license applicants who disregard relevant regulations during the transition period may face the possibility of their license applications being rejected.
Interestingly, while neighboring China has taken a stricter stance on cryptocurrencies, Hong Kong has embraced crypto firms, aiming to bolster its status as a global financial hub. To this end, Hong Kong introduced a new licensing framework for virtual asset service providers, intending to promote a more regulated environment.
On January 11, 2023, Julia Leung, CEO of Hong Kong’s SFC, announced plans to launch a licensing scheme to impose limitations on retail crypto traders for trading highly-liquid assets, to protect investors. The SFC aimed to establish requirements to restrict trading to significant virtual investments, thus avoiding widespread access to all products.
Highlighting recent developments, both HashKey and OSL have emerged as trailblazers by securing licenses for retail trading under Hong Kong’s new regulatory regime. This initiative, which began on June 1, marks a significant step forward for the city in its efforts to establish itself as a crypto-friendly and financially robust destination.