Crypto Exchange HTX Applies for License in Hong Kong
HTX, formerly known as Huobi, has submitted an application for a crypto license in Hong Kong. The exchange is seeking a virtual asset trading platform (VATP) license for its local subsidiary, Huobi HK, which will be operated by HBGL Hong Kong Limited. This move comes after the introduction of a new regulatory regime in Hong Kong in late 2022.
Increasing Interest in Hong Kong
- Bybit, another crypto exchange, has also applied for licensing from the Securities and Futures Commission (SFC) to operate in Hong Kong.
- The SFC has granted licenses to only two exchanges so far: OSL and HashKey Exchange.
Criticisms of Hong Kong’s Crypto Approach
- Wang Yang, vice president of the Hong Kong University of Science and Technology, has raised concerns about the current licensing system, calling it burdensome and counterproductive.
- He coined the term “Licensed to Be Killed” to highlight the challenges faced by licensed exchanges like OSL, which have experienced significant losses after obtaining approval to operate in the region.
Hot Take: Evaluating the Effectiveness of Licensing Systems
In assessing the effectiveness of licensing systems for crypto exchanges, it is crucial to consider the potential challenges and risks that licensed entities may face. While obtaining a license demonstrates compliance with regulatory requirements, it does not guarantee success or immunity from market volatility.
The Burdensome Nature of Licensing
- The licensing process can be complex and time-consuming, requiring extensive documentation and adherence to strict guidelines.
- This burden may hinder innovation and deter smaller players from entering the market.
The “Licensed to Be Killed” Phenomenon
- Despite obtaining licenses, exchanges like OSL have faced significant losses, highlighting the unpredictability of the crypto market.
- This phenomenon raises questions about whether licensing provides sufficient protection for exchanges and investors.
To strike a balance between regulation and innovation, authorities should continually evaluate and refine their licensing frameworks. It is essential to create an environment that fosters growth while safeguarding the interests of all stakeholders involved in the crypto industry.
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