The Hong Kong Securities and Futures Commission (SFC) did this announced plans to issue more licenses for crypto asset exchanges by the end of 2024.
This decision comes after a five-month evaluation period, during which only three platforms received full licenses and 11 had provisional licenses, raising initial concerns about the possibility further approvals.
Hong Kong promotes a crypto-friendly environment
During the annual Hong Kong Fintech Week eventEric Yip, executive director of intermediaries at the SFC, revealed that the regulatory body plans to publish a final list of licensed exchanges by the end of the year.
This move marks a crucial step in the city’s ambition to establish itself as a digital asset hub in Asia. Notably, Hong Kong has been actively working to renew its appeal as a financial center, especially after recent developments political challenges.
The city’s ambition to promote a crypto-friendly environment has been met with interest and caution, as regulatory concerns have slowed the licensing process for new crypto exchanges.
Yip noted that most applicants have responded to the SFC’s feedback by committing to improvements in their operational practices, including implementing regulatory changes to support investor protection and promote transparency in the digital asset space . In his words:
Applicants and their auditors have largely taken on board our feedback and are willing to commit resources to resolve issues and take a long-term view in developing their business in a regulated environment.
Path to licensing and regulatory developments
Once these exchanges meet the SFC’s requirements, they will be granted licenses to operate with certain restrictions. According to Yip, these exchanges are expected to undergo a third-party review in collaboration with the SFC before the restrictions are lifted.
The final licensing phase aims to ensure that the exchanges meet strict regulatory standards, addressing previously identified shortcomings therein operational practices.
An advisory panel will be formed in early 2025, consisting of authorized exchanges and the SFC. This panel will do that promote closer regulatory cooperation and offer an avenue for continued dialogue between stock exchanges and regulators.
In addition to licensing efforts, Hong Kong is developing a regulatory framework that focuses on over-the-counter (OTC) crypto trading platforms and custodians. This framework aims to create a “safer and better regulated environment” for institutional investors and private users.
Yip emphasized the importance of structured regulation in maintaining Hong Kong’s position as a competitive financial center, especially as the region continues to attract an increasing number of digital asset companies seeking regulatory clarity and stability .
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