Starting
this Saturday, cryptocurrency trading platforms wishing to offer their services
in Hong Kong will no longer be able to use the “grace period” set by
the local regulator. If they have not obtained a license or
applied for one by June 1, they will be committing a criminal offense.
Hong Kong’s
SFC has issued a statement reminding the public that the “non-contravention
period” for virtual asset trading platforms (VATPs) operating in Hong Kong will
end on June 1, 2024.
The
regulator emphasized that all VATPs must be either licensed by the SFC or
“deemed-to-be-licensed” VATP applicants under the Anti-Money
Laundering and Counter-Terrorist Financing Ordinance (AMLO). Operating a VATP
in Hong Kong without proper licensing will be considered a criminal offense,
and the SFC has vowed to take action against any breaches of the law.
“Investors
are urged to trade virtual assets ONLY on SFC-licensed VATPs,” the SFC advised.
“They should check the ‘List of licensed virtual asset trading platforms’ on
the SFC’s website to ascertain whether the VATP they are dealing with is
formally licensed by the SFC.”
The
regulator also cautioned that deemed-to-be-licensed VATP applicants are not
formally licensed and must still demonstrate the implementation and
effectiveness of their policies, procedures, systems, and controls to the SFC’s
satisfaction.
Deemed-to-be-licensed
VATP applicants and their ultimate owners are required to comply fully with all SFC regulatory requirements and licensing conditions. The SFC expects these
applicants to refrain from actively marketing their services or onboarding new
retail clients until they have demonstrated compliance and obtained formal
licensing.
In the
coming months, the SFC will conduct on-site inspections of
deemed-to-be-licensed VATP applicants to assess their compliance with
regulatory requirements. The inspections will focus on client asset safeguarding and
know-your-client processes.
One Year since the Crypto
Market Revolution
Exactly one
year ago, new regulations by the SFC came into effect, which allowed licensed
entities to offer retail customers access to cryptocurrencies. Although
initially, it was thought that this move could make Hong Kong a new
cryptocurrency hub, only a small number of companies managed to obtain the
necessary licenses to provide services.
Hong Kong crypto exchange https://t.co/XyOT2Qmhuv has shut down after failing to meet local licensing requirements effective June 1. The region’s SFC required all crypto exchanges to obtain an operational license, with those failing to apply needing to cease operations by May 31.
— Telo News (@Telo_Official) May 24, 2024
The
approaching deadline has led some firms to withdraw their license applications.
Among them was Gate.io, which created an independent exchange brand, Gate.HK,
to enter the local market.
Last
week, Finance Magnates reported that OKX HK had also withdrawn its
license application and would cease operations on May 31, 2024. The Hong Kong
branch was launched at the end of March 2023, as many companies prepared to
enter the local market by the beginning of June.
Starting
this Saturday, cryptocurrency trading platforms wishing to offer their services
in Hong Kong will no longer be able to use the “grace period” set by
the local regulator. If they have not obtained a license or
applied for one by June 1, they will be committing a criminal offense.
Hong Kong’s
SFC has issued a statement reminding the public that the “non-contravention
period” for virtual asset trading platforms (VATPs) operating in Hong Kong will
end on June 1, 2024.
The
regulator emphasized that all VATPs must be either licensed by the SFC or
“deemed-to-be-licensed” VATP applicants under the Anti-Money
Laundering and Counter-Terrorist Financing Ordinance (AMLO). Operating a VATP
in Hong Kong without proper licensing will be considered a criminal offense,
and the SFC has vowed to take action against any breaches of the law.
“Investors
are urged to trade virtual assets ONLY on SFC-licensed VATPs,” the SFC advised.
“They should check the ‘List of licensed virtual asset trading platforms’ on
the SFC’s website to ascertain whether the VATP they are dealing with is
formally licensed by the SFC.”
The
regulator also cautioned that deemed-to-be-licensed VATP applicants are not
formally licensed and must still demonstrate the implementation and
effectiveness of their policies, procedures, systems, and controls to the SFC’s
satisfaction.
Deemed-to-be-licensed
VATP applicants and their ultimate owners are required to comply fully with all SFC regulatory requirements and licensing conditions. The SFC expects these
applicants to refrain from actively marketing their services or onboarding new
retail clients until they have demonstrated compliance and obtained formal
licensing.
In the
coming months, the SFC will conduct on-site inspections of
deemed-to-be-licensed VATP applicants to assess their compliance with
regulatory requirements. The inspections will focus on client asset safeguarding and
know-your-client processes.
One Year since the Crypto
Market Revolution
Exactly one
year ago, new regulations by the SFC came into effect, which allowed licensed
entities to offer retail customers access to cryptocurrencies. Although
initially, it was thought that this move could make Hong Kong a new
cryptocurrency hub, only a small number of companies managed to obtain the
necessary licenses to provide services.
Hong Kong crypto exchange https://t.co/XyOT2Qmhuv has shut down after failing to meet local licensing requirements effective June 1. The region’s SFC required all crypto exchanges to obtain an operational license, with those failing to apply needing to cease operations by May 31.
— Telo News (@Telo_Official) May 24, 2024
The
approaching deadline has led some firms to withdraw their license applications.
Among them was Gate.io, which created an independent exchange brand, Gate.HK,
to enter the local market.
Last
week, Finance Magnates reported that OKX HK had also withdrawn its
license application and would cease operations on May 31, 2024. The Hong Kong
branch was launched at the end of March 2023, as many companies prepared to
enter the local market by the beginning of June.
