Key Takeaways
- The official deadline for submitting applications passed on May 31, 2024.
- Operating an unlicensed virtual asset trading platform in Hong Kong has become a criminal offence, effective June 1
The Hong Kong Securities and Futures Commission (SFC) has granted a digital asset exchange license to Hong Kong Digital Asset Xchange Limited (HKDAEx) on August 27. This approval comes even though the official deadline for submitting applications passed on May 31, 2024.
The SFC had rolled out a new licensing framework in June 2023, mandating that all virtual asset trading platforms operating in Hong Kong submit their applications by February 29, 2024.
Platforms that failed to meet this deadline were warned they could face mandatory shutdowns starting May 1, 2024. Despite the deadlines, HKDAEx moved forward with its application process, eventually receiving approval from the SFC.
This recent license issuance is part of Hong Kong’s broader efforts to position itself as a leading cryptocurrency hub in Asia. The SFC has made it clear that virtual asset trading platforms need to adhere to strict regulations and undergo thorough inspections.
If a platform cannot resolve critical deficiencies found during these inspections, its application could be rejected, or its provisional license status could be revoked. However, the SFC has yet to disclose the names of the exchanges that may face such issues.
The Stock Exchange of Hong Kong Limited (HKEX) and the SFC have announced a temporary relaxation of the minimum market capitalization requirements for Specialist Technology Company IPOs. There is also a relaxation of third-party investment requirements for Special Purpose Acquisition Companies (SPACs) involved in de-SPAC transactions. These changes will be in effect from September 1, 2024, to August 31, 2027.
As of now, operating an unlicensed virtual asset trading platform in Hong Kong has become a criminal offense, effective June 1. While the city has seen a rise in crypto activities, only two trading platforms, OSL Digital Securities and Hash Blockchain, have received full operational licenses. Several other exchanges, including Crypto.com, Bullish, and HKbitEX, are still in the process of securing full licenses.
The Hong Kong Monetary Authority (HKMA) also recently launched Project Ensemble on August 28, aiming to explore interbank settlement using central bank digital currency and real-world asset tokenization. Additionally, the HKMA introduced a stablecoin issuer sandbox on July 18, featuring participation from various local and international entities.
The latest Henley Crypto Adoption Index 2024 also put Hong Kong second globally in cryptocurrency adoption, following Singapore.
