The Securities and Futures Commission (SFC) of Hong Kong has announced There are plans to issue more licenses for crypto asset exchanges by the end of 2024.
The decision comes after a five-month assessment period during which only three platforms received full licenses and 11 had provisional licenses, raising initial concerns about the possibility of further approvals.
Hong Kong is promoting a crypto-friendly environment
During Hong Kong’s annual Fintech Week event, Eric Yip, executive director of intermediaries at the SFC, revealed that the regulatory body intends to publish the final list of licensed exchanges by the end of the year.
The move signals a significant step in the city’s ambition to establish itself as a digital asset hub in Asia. In particular, Hong Kong is actively working to revive its appeal as a financial centre, especially after recent political challenges.
The city’s ambition to foster a crypto-friendly environment has been met with interest and caution, as regulatory concerns have slowed the licensing process for new crypto exchanges.
Yip noted that most applicants have responded to the SFC’s response by committing to improving their operating practices, including implementing regulatory changes to support investor protection and promote transparency in the digital asset sector. In his words:
Applicants and their controllers have broadly accepted our feedback, and are willing to commit resources to rectify the issues and take a long-term approach to developing their businesses in a regulated environment.
Licensing and regulatory development pathways
Once these exchanges meet the requirements of the SFC, they will be granted a license to operate with certain restrictions. According to Yip, these exchanges are expected to undergo a third-party review in collaboration with the SFC before the ban is lifted.
The final licensing phase aims to ensure that exchanges meet stringent regulatory standards while addressing previously identified shortcomings in their operating practices.
An advisory panel will be formed in early 2025, consisting of authorized exchanges and SFCs. This panel will Promote and provide close regulatory cooperation An opportunity for ongoing dialogue between exchanges and regulators.
In addition to licensing efforts, Hong Kong is developing a regulatory framework targeting over-the-counter (OTC) crypto trading platforms and custodians. The framework seeks to create a “safer and more regulated environment” for institutional investors and retail users.
Yip highlighted the importance of structured regulations in maintaining Hong Kong’s position as a competitive financial centre, especially as the region continues to attract a growing number of digital asset businesses looking for regulatory clarity and stability.
Featured image, chart from TradingView, created with DALL-E
