Stay Compliant: Hong Kong SFC Conducts Inspection of Unlicensed Crypto Firms
Ensure You Meet Regulatory Deadlines:
- The Hong Kong Securities and Futures Commission (SFC) will conduct on-site inspections of virtual asset trading platforms (VATPs) that have not completed their regulatory applications by the June 1 deadline.
- All local crypto trading platforms in Hong Kong must be licensed or “deemed-to-be-licensed” by the SFC after June 1.
- Operating an unlicensed VATP after the deadline will be considered a criminal offense.
Strict Enforcement and Compliance Measures
Prepare for On-Site Inspections:
- The SFC will focus on client asset safeguarding and Know Your Customer (KYC) processes during the inspections.
- Investors are advised to trade only on licensed platforms to ensure security and compliance.
- Companies seeking licenses should refrain from marketing services or onboarding new clients until formal licensing is obtained.
- Mainland Chinese residents should be prevented from accessing services to comply with regulations.
Industry Impact: Withdrawals and Restructuring Ahead of Deadline
Industry Response to Regulatory Changes:
- Eleven crypto firms, including OKX and Huobi’s local arm, withdrew their applications before the deadline.
- Gate.HK ceased new user acquisition, marketing activities, and token listings to comply with regulations.
- Only OSL Digital Securities Limited and Hash Blockchain Limited have received licenses to operate in Hong Kong so far.
Exciting Development: Launch of Crypto ETFs in Hong Kong
Crypto ETFs Expand Investment Options:
- Harvest Global Investments Ltd. and partnerships like HashKey Capital Ltd. listed Bitcoin and Ether ETFs in Hong Kong, introducing new options for investors.
- Bloomberg Intelligence predicts significant growth in assets for Hong Kong-based Bitcoin and Ether funds over the next few years.
- Crypto ETFs in Hong Kong are expected to accumulate over $1 billion in assets by the end of 2024, offering potential competition to existing products.
Hot Take: Embrace Regulation for a Safer Crypto Environment
Prepare for Compliance:
Complying with regulations and obtaining the necessary licenses in Hong Kong is crucial for the crypto industry’s growth and sustainability. By prioritizing compliance, companies can ensure investor trust, regulatory approval, and long-term success in this dynamic sector.
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