The one-year transition period for operating virtual asset exchanges in Hong Kong (which required the completion of license applications) officially ended on June 1, 2024. Currently, only two exchanges, OSL Exchange and HashKey Exchange, have officially obtained licenses, while 11 exchanges have been identified as applicants awaiting licenses.
According to a statement released earlier by the Securities and Futures Commission (SFC) of Hong Kong, the transitional period for operating virtual asset exchanges in Hong Kong, as stipulated by the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, officially ended on June 1, 2024. After June 1st, all virtual asset exchanges operating in Hong Kong must obtain a license from the SFC under the Anti-Money Laundering Ordinance, or be identified as an applicant for a virtual asset trading platform deemed to have been granted a license. Violation of this ordinance will result in criminal liability for the relevant virtual asset trading platforms, and the SFC will take appropriate enforcement actions.
List of licensed exchanges in Hong Kong
In response to the JPEX cryptocurrency exchange fraud case, the SFC of Hong Kong began officially disclosing the status of license applications for virtual asset trading platforms in late September of last year. The relevant list includes licensed platforms, platforms that have applied for licenses, and closed platforms.
According to the latest announcement by the SFC, there are currently only two exchanges, OSL Exchange (OSL Digital Securities Limited) and HashKey Exchange, that have obtained official licenses from the SFC. Both exchanges are required to conduct due diligence investigations before listing virtual assets for trading to ensure that the assets meet the token admission criteria and are approved by the SFC. Sufficient information must also be disclosed to investors.
Image: List of licensed exchanges in Hong Kong
11 exchanges identified as applicants awaiting licenses
It is worth noting that there are currently 11 exchanges, HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, xWhale, YAX, Bullish, Crypto.com, WhaleFin, and Matrixport HK, that are identified as “applicants awaiting licenses,” meaning they are on the pending list. The SFC stated that these applicants may not necessarily be granted licenses in the end and may be required to terminate their operations in Hong Kong. Currently, they should not engage in business activities in Hong Kong or actively promote their services to Hong Kong investors.
Image: List of Hong Kong license applicants and exchanges identified as applicants awaiting licenses
On the other hand, platforms that do not meet the requirements and are considered “not deemed to have been granted a license” must cease all operations within three months. Previously, exchanges such as OKX, Huobi, and Bybit, which had submitted license applications, have now withdrawn their applications, and major global exchanges such as Binance and Coinbase have not submitted applications.
Image: List of license applications rejected, refused, and withdrawn
HashKey CEO: Hong Kong license application costs at least tens of millions
Why have so many exchanges chosen to withdraw or not apply? In addition to regulatory requirements, cost may also be a major consideration. According to a report by FT Chinese, Livio Weng, the CEO of HashKey Exchange, which has officially obtained a Hong Kong license, stated that the application cost for a Hong Kong license is at least tens of millions of Hong Kong dollars. In addition, regarding the current regulatory situation, Weng revealed that the SFC may not have enough manpower to conduct comprehensive reviews of all Native Web3 institutions, but at least they have provided a clear development roadmap.
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