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Hong Kong Warns Crypto Exchanges: Comply by End of February or Shut Down in May

2 mins
Updated by Kyle Baird
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In Brief

  • Hong Kong SFC sets 29 February deadline for crypto exchanges to apply for VATP licenses.
  • OSL maintains high insurance despite SFC's lowered coverage requirement for crypto assets.
  • HashKey, with recent funding, achieves unicorn status among HK's regulated crypto exchanges.
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Hong Kong’s Securities and Futures Commission (SFC) has issued a clear mandate to all virtual asset trading platforms (VATPs) operating within its jurisdiction. As of February 29, all crypto exchanges in Hong Kong must either obtain or apply for a VATP license.

The SFC’s directive is a significant step in establishing a regulated and safe environment for virtual asset investors.

Hong Kong Crypto Exchanges Running Out of Time

The commission emphasized the importance of trading through licensed exchanges, urging investors to regularly check the regulatory status of their platforms. The SFC stated:

“Investors should check whether a VATP is on the ‘List of licensed virtual asset trading platforms’ or the ‘List of virtual asset trading platform applicants.’”

This list differentiates between fully licensed VATPs and those whose applications are pending. This highlights the ongoing efforts to bring clarity and security to the digital asset space in Hong Kong.

OSL and HashKey are the only two licensed exchanges currently in Hong Kong. Source: SFC.HK
OSL and HashKey, two licensed exchanges in Hong Kong. Source: SFC.HK

Further underscoring the seriousness of these regulations, the SFC warned that trading on unlicensed platforms could pose significant risks, as approval for pending applications is not guaranteed.

Investors currently using unlicensed platforms are advised to transfer their holdings to a licensed entity by May 31. Failing to do so will result in the potential closure of their accounts.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

Two Pack Leaders Emerge

In tandem with these regulatory developments, OSL, one of the two SFC-approved exchanges, has reaffirmed its commitment to high-security standards despite the SFC’s recent decision to lower mandatory insurance coverage on digital assets to 50%.

The exchange asserted its stance, reflecting a keen awareness of the volatile nature of the cryptocurrency market

“OSL is steadfast in its commitment to safeguarding at least 95% of regulated assets under custody.”

Meanwhile, HashKey, another SFC-approved exchange, has achieved a significant milestone, attaining unicorn status with a valuation exceeding $1.2 billion. This achievement marks a notable success story within Hong Kong’s tightly regulated crypto exchange sector.

The company’s rapid growth and high valuation reflect the changing nature of the crypto market in Hong Kong, even amid more stringent regulatory oversight.

Hong Kong is positioning itself as a hub for digital asset trading. These latest developments signify a balanced approach between fostering innovation and ensuring robust investor protection.

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Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.
This article was initially compiled by an advanced AI, engineered to extract, analyze, and organize information from a broad array of sources. It operates devoid of personal beliefs, emotions, or biases, providing data-centric content. To ensure its relevance, accuracy, and adherence to BeInCrypto’s editorial standards, a human editor meticulously reviewed, edited, and approved the article for publication.

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Kyle Baird
Kyle migrated from the East Coast USA to South-East Asia after graduating from Pennsylvania's East Stroudsburg University with a Bachelor of Science degree in 2010. Following in the footsteps of his grandfather, Kyle got his start buying stocks and precious metals in his teens. This sparked his interest in learning and writing about cryptocurrencies. He started as a copywriter for Bitcoinist in 2016 before taking on an editor's role at BeInCrypto at the beginning of 2018.
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