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As the dust settles on the 29 February 2024 deadline for Hong Kong crypto exchanges to submit their license applications to the Securities and Futures Commission (SFC), the city’s virtual asset landscape stands at the threshold of a transformative era.
This significant milestone heralds a new phase where regulatory compliance and investor protection are paramount. The SFC remains steadfast in its commitment to safeguarding investors’ interests and upholding market integrity.
Hong Kong crypto exchanges that failed to submit their applications by the cutoff date now face the stark reality of ceasing operations in Hong Kong by 31 May 2024, as mandated by the regulator’s transitional arrangements.
Hong Kong protects crypto investors and maintains market integrity
The SFC has issued anunequivocal message to investors: exercise caution and perform due diligence when engaging with Hong Kong crypto exchanges or Virtual Asset Trading Platforms (VASPs).
The regulatoremphasisesthe importance of verifyingplatforms’regulatory status through their official website, with the“List of Licensed Virtual Asset Trading Platforms”and the“List of Virtual Asset Trading Platform Applicants”serving as crucial resources for informed decision-making.
While the applications on the“List of Virtual Asset Trading Platform Applicants”remain under review, the SFC has highlighted the inherent risks associated with trading on these platforms. Consequently, investors are strongly advised to limit their virtual asset trading activities to SFC-licensed VATPs, ensuring a higher level of protection and regulatory oversight.
The new regulations aim to enhance investor protection and market integrity by mandating comprehensive application requirements. These include management experience, industry qualifications, and external attestations.
The rules also specify token admission criteria, anti-money laundering (AML) requirements, and prohibitions on proprietary trading. Additionally, platforms must have adequate insurance or compensation arrangements to mitigate custodial risks.
The SFC reminds industry participants and investors that Hong Kong crypto exchanges must have submitted license applications by 29 February 2024 to continue operating in Hong Kong on or after 1 June 2024.
Hong Kong crypto exchanges that did not meet this deadline must close down their businesses by 31 May 2024, pursuant to the transitional arrangements. Carrying on any unlicensed activity is a criminal offence.
Two licensed crypto services providers in Hong Kong
OSL Digital Securities Limited (OSL) and HashKey Digital Asset Group Limited (HashKey) are two prominent companies licensed by SFC in Hong Kong to operate as VATPs.
OSL Digital Securities Limited (OSL) was granted a license by the SFC in Hong Kong on 15 December 2020 to operate a virtual asset trading platform (VATP).
This license allows OSL to offer regulated digital asset trading services to institutional and professional investors. On 26 July 2022, OSL became the first Type 1 SFC-licensed digital asset broker to distribute security tokens to professional investors in Hong Kong through a private security token offering (STO).
The tokens developed on the Ethereum blockchain have a three-month tenor and a coupon linked to bitcoin performance. This milestone sets a precedent for regulated digital asset investment in Hong Kong, potentially influencing the global market for STOs.
Hash Blockchain Limited, operating as HashKey Exchange, was granted a license by the SFC in Hong Kong on 9 November 2022 to operate a virtual asset trading platform (VATP). This licence enables HashKey Exchange to offer regulated digital asset trading services to institutional and professional investors in Hong Kong.
Based in Hong Kong, Hash Blockchain focuses on blockchain technology and digital asset trading solutions. It aims to bridge the gap between traditional finance and the emerging digital asset industry with secure, compliant, and efficient trading services.
Hash Blockchain Limited is part of the HashKey Group, which has achieved a significant milestone as the world’s first digital asset group to hold virtual asset licenses from the Hong Kong SFC and the Financial Services Agency of Japan and an exemption to operate under the Payment Services Act from the Monetary Authority of Singapore.
The firm has also announced the successful facilitation of the first physical subscriptions for the Bosera HashKey Bitcoin Spot ETF and the Bosera HashKey Ethereum Spot ETF.
17 crypto trading platform applicants in Hong Kong
Hong Kong BGE Limited (BGE), a subsidiary of HKE Holdings Limited, operates within the digital asset and blockchain industry.
While the company has operations in both Hong Kong and Singapore, the specific date of its application for operation has not been publicly disclosed on the Hong Kong Securities and Futures Commission (SFC) website.
Established as a digital asset exchange in Hong Kong, HKbitEX facilitates compliant spot and over-the-counter trading.
While their commitment to regulatory adherence is evident, the precise date of their application remains obscured and is not disclosed on the SFC website.
Positioned as one of the pioneering entities in applying for a crypto exchange license, HKVAX emphasises the paramount importance of regulatory compliance.
According to them, their proactive approach includes securing approval-in-principle from the SFC to carry out Type 1 and Type 7 regulated activities, setting the stage for a seamless transition into the regulated landscape. The exact date of their application remains undisclosed.
VDX focuses on providing institutional digital asset solutions and leveraging industry-leading market depth and liquidity.
The specific date of their application remains veiled in strategic ambiguity and is not disclosed on the SFC website.
PantherTrade, a subsidiary of Futu Holdings and a digital asset platform, submitted its application on 15 November 2023, marking a decisive move in its quest for regulatory approval in Hong Kong.
The firm is bolstered by critical appointments, such as the addition of Chen Zhihu, formerly an investment director at Huobi Asset Management (Hong Kong) as a director.
On 6 December 2023, Accumulus GBA Technology (Hong Kong) Co., Ltd. submitted its application, demonstrating its commitment to aligning with Hong Kong’s regulatory environment for its Web 3.0 projects.
Accumulus launched its virtual asset trading platform in April 2023 and has updated it to version 2.0, marking a significant step in the city’s development.
DFX Labs Company Limited, based in Hong Kong, was founded on 2 May 2023. The company offers various services in the digital asset and blockchain sector.
On 27 December 2023, DFX Labs Company Limited applied to the Hong Kong Securities and Futures Commission for a virtual asset trading platform license.
Bixin.com, initially established as HaoBTC in 2014, applied for a license on 24 January 2024. The platform provides various services, including spot and OTC trading, savings, staking, lending, and NFT creation and trading.
Bixin.com reports having over one million users and handling over three million transactions yearly. It claims to save its users approximately USD$1.85 million in transaction fees annually.
Thousand Whales Technology (BVI) Limited, operating the trading platform’ xWhale,’ submitted its application on 25 January 2024.
Originating from the Web3 trading platform “BusyWhale,” xWhale was developed by a team of experienced virtual asset entrepreneurs from Hong Kong with backgrounds in traditional finance.
On 6 February 2024, HighBlock Limited, a Hong Kong-based company, applied for a license for its online trading platform, bitV, which specialises in cryptocurrencies and digital assets.
bitV provides diverse products and services, including spot and derivatives trading, passive income opportunities, a Web3 wallet, and NFT creation and trading.
YAX submitted its license application on 7 February 2024. Founded in June 2022, YAX is a global cryptocurrency exchange offering various services, including virtual asset trading and custody.
YAX supports highly liquid virtual assets, such as Bitcoin (BTC), Ethereum (ETH), and USDT.
On 7 February 2024, Bullish, a technology firm focused on the digital assets sector, applied as one of the virtual asset applicants.
The company, which announced its flagship Bullish exchange in December 2021, operates the exchange through Bullish (GI) Limited under the regulation of the Gibraltar Financial Services Commission. Bullish has established offices in both Hong Kong and Singapore.
Foris DAX HK Limited, a crypto exchange company established on 22 August 2018 in Hong Kong, submitted a license application on 9 February 2024.
The company runs Crypto.com, a platform and exchange for cryptocurrencies offering various services such as spot and derivatives trading, avenues for earning passive income, a Web3 wallet, and the creation and trading of NFTs.
Whalefin is a comprehensive digital asset platform featuring services like spot and derivatives trading, mechanisms for earning passive income, a Web3 wallet, and NFT creation and trading. It submitted its application for a license on 21 February 2024.
This platform is a venture of Amber Group, a fintech unicorn, which has garnered support from top-tier investors worldwide.
On 26 February 2024, the Hong Kong division of Matrixport, founded by Jihan Wu, applied for a virtual asset trading platform license from the Hong Kong Securities Regulatory Commission.
This application makes it one of 21 virtual assets applicants seeking the license. The crypto exchange company is currently headquartered in Singapore, serves a customer base in Asia and Europe, and is looking to extend its services to Hong Kong.
On 29 February 2024, hi5 (Hong Kong) Limited, operating under the legal entity name, applied for a license.
In anticipation of obtaining this license, the crypto exchange company has launched hkx.hi.com, an independent trading platform tailored to Hong Kong users.
Hong Kong members are advised to buy and sell cryptocurrencies exclusively through this newly established exchange.
According to an update on the official website, Bitcoinworld is one of the companies that applied for a virtual asset trading platform license to SFC on 17 May 2024.
BitUniverse announced that its wholly-owned subsidiary, Bitcoin World Technology Limited, has been accepted by the SFC for its Category 1 (Securities Trading) and Category 7 (Providing Automated Trading Services) license applications.
Crypto trading platforms in Hong Kong that withdrew their license applications
AMMBR (HK) LIMITED, also known as Ammbr, has been registered in Hong Kong as a private company limited by shares since 2 November 2020 and is currently active.
Part of the broader Ammbr group, the company focuses on decentralized technology, particularly in the blockchain and Web 3.0 domains.
The company applied for a virtual asset trading platform license on 29 September 2023 but subsequently withdrew the application on 6 October 2023.
Min Qin is BitHarbour (Hong Kong) Limited’s key principal. The company has been involved in the rapidly evolving virtual asset and cryptocurrency market in Hong Kong.
BitHarbour applied for a virtual asset trading platform license on 11 January 2024 but withdrew the application on 29 January 2024.
Meex Digital Securities Limited (Meex) applied for a license from SFC to operate as a VATP on 10 December 2023 in Hong Kong.
However, according to the SFC’s records, Meex’s application was returned on 7 February 2024.
The Hong Kong affiliate of HTX, previously known as Huobi Global, resubmitted its application for a crypto license to operate in Hong Kong on 26 February 2024.
Hong Kong Limited made this second application for the virtual asset trading platform Huobi HK on Monday, after retracting its initial application on 23 February, as indicated by the list of cryptocurrency exchange license applicants on the SFC website. The company has retracted its license on 14 May 2024.
HKVAEX, established in December 2022 and operational since February 2023, applied for a license on 4 January 2024 but withdrew on 28 March 2024.
According to the South China Morning Post, although HKVAEX, under BX Services Limited, shows ties to Binance through website similarities and shared code, it operates independently in Hong Kong.
Despite a promotional collaboration describing Binance as a partner, both companies affirm HKVAEX’s independence from the Binance Group.
Willows Asia Technology Company Limited was established on 20 March 2019 and is one of the virtual asset applicants.
The company, which operates IBTCex, a digital asset trading platform tailored for the Asian market, submitted its license application on 22 February 2024 and withdrew on 13 May 2024.
Incorporated on 27 October 2023, QuanX Lab Limited is based in Hong Kong.
The company operates within the digital asset and blockchain sector, offering diverse services, including spot and derivatives trading, Web3 wallets, and the creation and trading of NFTs.
This is one of the Hong Kong crypto exchanges that applied for a virtual assets platform license on 29 February 2024 and withdrew on 13 May 2024.
Gate Digital Limited operates Gate.HK is a virtual asset exchange in Hong Kong that offers various cryptocurrencies, including Bitcoin and Ethereum.
The company applied to the SFC for a virtual asset trading platform license on 28 February 2024 but withdrew the application on 22 May 2024.
Hong Kong VAEXC Limited, associated with the virtual asset exchange platform VAEX, submitted an application for a virtual asset trading platform license to the Hong Kong Securities and Futures Commission (SFC) on 25 November 25, 2023.
However, on 25 May 2024, it was revealed that VAEX had withdrawn its application for the license. No further details are currently available regarding the reasons for the withdrawal or the company’s plans in the virtual asset exchange space.
On 31 January 2024, ByBit applied for a license through its associated entity, Spark Fintech Limited, and withdrew its application on 31 May 2024.
ByBit operates as an online platform for trading cryptocurrencies and digital assets. It offers a suite of products and services, including spot and derivatives trading, opportunities for passive income, a Web3 wallet, and NFT creation and trading.
Featured image credit: Edited fromFreepik
