Guidelines for Licensing Cryptocurrency Exchanges to be Released in Hong Kong

The Hong Kong Securities Futures Commission (SFC) is preparing to enable trading services for ordinary investors beginning on June 1 by releasing licensing guidelines for cryptocurrency exchanges in May. According to Bloomberg, the plans were verified by Julia Leung, CEO of the SFC, who disclosed that more than 150 interested parties had submitted feedback during the licensing regime consultation process.

The new guidelines would probably include, among other things, regulatory requirements for Know Your Client (KYC) and Anti-Money Laundering (AML) safeguards. These elements were also emphasized by the SFC in a study released on February 20 as crucial for controlling virtual assets.

A few trading platforms have already acquired licenses from the SFC, however the majority of prospective Virtual Asset Service Provider (VASP) licensees are still awaiting confirmation. OSL and Hashkey Group are two of them, according to Reuters.

However, despite Hong Kong’s ambitions to develop into a significant crypto hub, not all trading platforms have opted to remain there. When the VASP regime goes into effect on June 1st, Bitget, which boasts $1.4 trillion in assets in reserve, announced on April 24 that it would stop providing services to its Hong Kong customers.

Despite this setback, it is anticipated that the publication of the licensing guidelines will increase clarity and regulation in the Hong Kong cryptocurrency market and provide a framework for reputable trading platforms to operate within. This might enhance the city’s broader aspirations to position itself as a major hub for blockchain technology and help investors gain more confidence in the field.

With the Securities and Futures Commission becoming one of the first regulators to give guidance on digital asset fund managers in November 2018, Hong Kong has already achieved considerable advancements in this field. In recent years, the city has also hosted a number of prominent cryptocurrency events, such as the Token2049 conference, which draws global experts in the blockchain sector.

Despite this development, Hong Kong still has to contend with fierce rivalry from other major global crypto hubs like Singapore and Switzerland. The SFC may be able to assist Hong Kong in bolstering its position in this increasingly competitive market by setting clear licensing rules and regulatory criteria for crypto trading platforms.