Hong Kong’s Crypto Hub Ambitions Face Regulatory Challenges

Hong Kong’s aspirations to become a major crypto hub are encountering significant hurdles as over a dozen cryptocurrency exchanges struggle to secure full licenses due to regulatory concerns.

According to recent reports, the city’s Securities and Futures Commission (SFC) has identified unsatisfactory practices during on-site inspections of 11 “deemed-to-be-licensed” exchanges. These findings raise questions about their ability to meet the full licensing requirements. The investigation revealed that some exchanges rely heavily on a small number of executives to manage client asset custody, while others are not adequately protecting against cybercrime risks.

The exchanges under scrutiny include well-known names such as Crypto.com and Bullish, as well as local platforms like HKbitEX and PantherTrade.

To date, only two platforms—OSL and HashKey—hold full licenses in Hong Kong. While the SFC aims to issue additional licenses by the end of 2024, the process has already led to the withdrawal of 12 applications, including those from Bybit, Huobi HK, and OKX.

The SFC’s findings come as the regulator intensifies its efforts to enforce strict compliance among crypto platforms, with a particular focus on safeguarding client assets and enforcing robust know-your-client protocols.

This heightened scrutiny follows a scandal involving JPEX, an unlicensed crypto platform accused of defrauding over 2,600 victims of more than $200 million. The SFC previously reported that JPEX and crypto influencers had made false or misleading claims on social media, suggesting that the exchange had applied for a virtual asset trading platform license in Hong Kong. However, the regulator later clarified that JPEX had not submitted any such application, despite its assertions of being a “licensed and recognized platform” for trading digital assets and virtual currency.

Stay updated on the latest cryptocurrency news and developments at Global Crypto News.

Post Views: 6