Hong Kong Receives Applications from 24 Companies for Crypto Exchange Licenses
Hong Kong has become a sought-after destination for companies looking to establish regulated crypto exchanges, with 24 companies submitting applications for licenses. Notable players such as Bybit, OKX, and Crypto.com are among the applicants, indicating their confidence in Hong Kong’s regulatory framework. However, major exchanges like Binance, Coinbase, and Kraken have chosen not to participate in the license race. The city’s virtual asset rulebook prioritizes investor protection but also comes with compliance costs that may pose challenges for some companies.
Binance, Coinbase Omit Hong Kong’s Crypto License Race
While 24 companies have applied for crypto exchange licenses in Hong Kong, the absence of major exchanges like Binance, Coinbase, and Kraken raises questions about their strategic decisions regarding the city. This list of applicants serves as a gauge of industry sentiment and confidence in Hong Kong’s regulatory framework. Angela Ang from TRM Labs sees the presence of recognized players as a positive sign.
However, it is worth noting that Hong Kong lags significantly behind Singapore in terms of the number of license applicants. Singapore has seen around 70 companies apply for licenses by the end of 2021, three times the number in Hong Kong.
The success of Hong Kong as a crypto hub will depend on the investments made by these companies in the local market. Compliance costs associated with operating a regulated business in the digital asset industry are inevitable and must be considered in long-term strategies.
OTC Trading Dominates Crypto Inflows In Hong Kong
Hong Kong has been focusing on becoming a cryptocurrency hub since late 2022 to showcase its technological capabilities and secure its future. Currently, HashKey Exchange and OSL Group are the only authorized digital asset exchanges in the city. However, most digital flows into Hong Kong have occurred through over-the-counter (OTC) trading rather than digital asset exchanges.
Data from Chainalysis reveals that approximately $64 billion of crypto entered Hong Kong through OTC channels last year. The government is looking to regulate OTC outlets that facilitate cash-to-crypto transactions with minimal oversight. Additionally, Hong Kong is considering regulations for stablecoins and the introduction of exchange-traded funds (ETFs) that invest directly in selected cryptocurrencies.
The ongoing development of Hong Kong’s digital asset exchange sector and the influx of license applications reflect the city’s ambition to become a regulated hub for the cryptocurrency industry. However, companies must carefully consider the compliance costs associated with operating a regulated business.
Hot Take: Hong Kong Attracts Applications for Crypto Exchange Licenses
Hong Kong has received applications from 24 companies seeking licenses to operate crypto exchanges in the city, indicating its growing status as a regulated hub for the cryptocurrency industry. Notable players like Bybit, OKX, and Crypto.com have applied, demonstrating their confidence in Hong Kong’s regulatory framework. However, major exchanges such as Binance, Coinbase, and Kraken have chosen not to participate in this license race. Compliance costs associated with operating a regulated business may pose challenges for some companies. The success of Hong Kong as a crypto hub will depend on the investments made by these companies in the local market.
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