The Hong Kong Securities and Futures Fee (SFC) has just lately granted preliminary approval to 11 cryptocurrency exchanges to proceed working within the metropolis.
This marks step one in the direction of issuing digital asset buying and selling platform (VATP) licenses since 2022. The transfer comes as Hong Kong goals to ascertain itself as a outstanding crypto hub alongside international counterparts like Singapore and Dubai.
Hong Kong’s Crypto Change Scene Faces Regulatory Hurdles
In response to a South China Morning Submit report, among the many accredited exchanges, Crypto.com, initially based in Hong Kong and now working from Singapore, stands out as the most important alternate “deemed to be licensed.”
Notably, it’s the solely alternate inside the prime 20 by 24-hour buying and selling quantity measured by CoinGecko, nonetheless searching for a license in Hong Kong. Bullish, integrated in Gibraltar but in addition working from Singapore and New York, is the following vital alternate deemed licensed.
Underneath the new rules launched final yr, cryptocurrency exchanges should receive approval for the deeming association to proceed working whereas awaiting full licensing approval.
The deadline for exchanges not searching for a license to stop operations was June 1. Nonetheless, some exchanges have withdrawn their license functions as a result of problems arising from the regulatory modifications.
A number of exchanges that withdrew their functions had ties to mainland China, the place they have been initially based however left following Beijing’s crackdown on digital tokens. Notable exchanges embody native associates of main platforms akin to OKX, Binance, HTX, KuCoin, Gate.io, and, most just lately, Bybit.
The Hong Kong authorities has emphasised compliance with rules, together with measures to stop mainland Chinese language residents from accessing crypto platforms and the just lately accredited spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) markets.
Market Confidence Shaken?
Per the report, the withdrawals have raised issues about Hong Kong’s progress in attracting crypto-related companies and creating a thriving Web3 ecosystem. The town started its efforts to turn into a crypto hub in late 2022.
Legislative Council member Duncan Chiu, representing the knowledge know-how sector, expressed in an opinion piece that the withdrawals had shaken market confidence in native Web3 improvement. Regardless of hopes of accessing mainland Chinese language clients, Beijing maintains a strict ban on business crypto actions on the mainland.
The monetary authority of Shenzhen, the town neighboring Hong Kong, just lately issued a warning in opposition to cross-border cryptocurrency buying and selling, emphasizing that such actions are “unlawful and topic to felony liabilities.”
The discover additionally highlighted the hazards of crypto-related fraud and reiterated the illegality of offering web providers to mainland clients with out approval.
General, Hong Kong’s granting of preliminary approval to exchanges represents a major step within the metropolis’s regulatory journey towards turning into an innovation hub. Nonetheless, challenges stay, together with withdrawing exchanges with mainland Chinese language ties and Beijing’s strict business digital asset exercise ban.
The way forward for Hong Kong’s digital asset market will rely upon hanging a stability between regulatory compliance, market confidence, and attracting companies inside the evolving international crypto panorama.
As of press time, the most important cryptocurrency available on the market, Bitcoin, is buying and selling at $69,200 after briefly climbing towards the $70,400 mark within the early hours of Monday’s buying and selling session.
Featured picture from Unsplash chart from TradingView.com
