Key takeaways:
- In less than two months, the Hong Kong SFC received 18 applications for crypto licenses from domestic and international participants.
- Web3 companies need to invest up to $25 million in developing their apps for these licenses.
In less than two months, 18 applications for cryptocurrency licenses from domestic and international participants have been received by the Hong Kong Securities and Futures Commission (SFC).
According to a local newspaper, on February 20, Huobi HK, the Hong Kong branch of the cryptocurrency exchange Huobi, submitted an application to the Hong Kong SFC for a license to operate a virtual asset trading platform.
Beginning in mid-November 2023, a total of eighteen cryptocurrency exchanges—including Crypto.com, OKX, Bybit, and DFX Labs—filed for the same license application.
Applicants must successfully complete rigorous due diligence procedures, such as a conventional financial audit with a wider purview than verification of reserves, in order to be granted a license. Consequently, web3 companies need to invest up to $25 million in developing their apps for these licenses.
Conventional brokerages, such as the Chinese stock brokerage Tiger Brokers, have also been drawn to Hong Kong due to the recent clarification of exchange licensing laws.
The brokerage amended its Type 1 SFC license in January to allow cryptocurrency trading for Hong Kong-based financial institutions and professional investors.
One of China’s biggest fund managers, Harvest Hong Kong, submitted the first application for a spot Bitcoin Exchange Traded Fund (ETF) to the Hong Kong regulator on January 26.
Hong Kong has established a minimum insurance requirement of 50% for licensed cryptocurrency exchanges managing consumers’ assets, even as it prepares for the adoption of cryptocurrencies.
All assets under custody must have a minimum of 50% insurance coverage, as OSL Exchange has previously revealed. Simultaneously, OSL declared that it had entered into a two-year agreement for an insurance policy that would insure ninety-five percent of the assets of its users with Canopius, a syndicate of Lloyds of London underwriters.
Japan intends to encourage strategic domestic investments into Web3 firms by allowing LP organizations to buy and keep crypto assets. Venture capital firms in Japan were prohibited from investing in cryptocurrency assets prior to the bill’s passage.
