Hong Kong SFC Accelerates Licensing for Crypto Exchanges with Approvals Anticipated by Year-End

Hong Kong SFC Accelerates Licensing for Crypto Exchanges with Approvals Anticipated by Year-End

At Fintech Week 2024, Dr. Eric Yip, Executive Director of Intermediaries at the Securities and Futures Commission (SFC) of Hong Kong, announced significant initiatives aimed at advancing the city’s virtual asset trading platform (VATP) sector. A primary focus of the SFC is to expedite the licensing process for VATP applicants that hold a 'deemed-to-be-licensed' status, streamlining their path to formal authorization.

This fast-tracking will involve on-site inspections and continuous dialogue with senior management and controllers of the platforms. The goal is to ensure compliance and transparency in their operations. The SFC has indicated that it expects to grant the first batch of formal licenses to VATP applicants by the end of this year.

Currently, 14 crypto trading platforms are operating under ‘deemed-to-be-licensed’ status as per the SFC's official website. Notable names among these include Crypto.com and Matrixport. To date, only three exchanges have successfully received full licenses from the Hong Kong regulator.

Consultative Panel Set to Launch in Early 2025

In addition to streamlining the licensing process, the SFC is also planning to establish a consultative panel for VATPs by early 2025. This panel will comprise representatives from each licensed VATP, fostering ongoing communication between the regulator and industry participants. The insights derived from this panel will play a crucial role in shaping the SFC's future policy decisions. Additionally, input from other stakeholders will contribute to an upcoming white paper outlining regulatory priorities for the virtual asset sector.

Further regulatory developments are on the horizon, including collaborations with the Hong Kong SAR Government and other regulatory bodies to establish frameworks governing virtual asset trading services and custody arrangements. The SFC is committed to supporting tokenization initiatives and is actively involved in the Hong Kong Monetary Authority’s Project Ensemble. This project is focused on developing the necessary infrastructure for tokenization within the asset management industry, aiming to set industry standards for the settlement of tokenized assets.

Dr. Yip emphasized the SFC's commitment to adopting a pragmatic and proactive approach in building a comprehensive regulatory framework. He underscored the dual commitment to investor protection and market growth, which remains central to the regulator’s strategy.