HKVAX has received its license for the cryptocurrency exchange and Hong Kong’s financial landscape is still waxing for the better. Recently, the Securities and Futures Commission (SFC) confirmed this approval. HKVAX became the third crypto-based platform licensed in the region.
Simi Cheung, head of the SFC’s Inspection & Money Laundering Branch, says she announced the decision in an interview. Leung said that Hong Kong should be able to attract more crypto firms with the new licensing framework. However, she indicated that the SFC plans to grant more licenses before the end of the year.
That followed the SFC’s earlier licensing of OSL, HashKey, along with HKVAX. These firms have already started offering crypto trading services in the city. Hong Kong’s efforts to push the territory’s position on the global crypto market dovetail with the SFC’s.
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Hong Kong’s Crypto Regulation Draws Mixed Reactions
Under its licensing framework launched in June 2023, the SFC permits crypto trading platforms to work with retail investors. It has generated interest from crypto firms that wish to open shops in Hong Kong. Leung stated that it goes to the point of keeping the regulation but also good innovation in the sector.
HKVAX is capitalizing on this new opportunity to offer over-the-counter trading and custody solutions. The license renews HKVAX’s commitment to the virtual asset industry, said Anthony Ng, the company’s co-founder and CEO. He also said the approval showed Hong Kong’s ambition to remain a global financial hub.
However, some stakeholders have criticized the regulatory environment. Duncan Chiu, a local lawmaker, had concerns about the demanding rules. He realizes that these regulations might prevent international exchanges from entering the Hong Kong marketplace.
Hong Kong Crypto Platforms Face Governance Concerns
The SFC reviews 11 other platforms that have ‘been deemed to be licensed.’ Under the new framework, these firms submitted applications and are having their plants first inspected. The SFC has already identified those applicants as having some compliance issues.
Some exchanges were recently found to have governance issues. Several of these platforms should have leaned more heavily on a small handful of executives entrusted with the custody of their client assets, a reliance that raises many questions about how these platforms would manage their client’s assets.
The inspections also found weaknesses in cybersecurity measures at some exchanges. The SFC warned that firms that don’t address these issues could lose their provisional licenses. This ongoing scrutiny shows the SFC’s determination to maintain high standards in the world of crypto.
HKVAX Approval May Encourage New Applications
Hong Kong is expected to welcome more firms applying for licenses under this regulatory framework. HKVAX’s approval will likely inspire other companies to apply for the same licenses.
The SFC’s proactive nature towards building a solid crypto ecosystem is a good signal that a robust crypto ecosystem should be our aim.
However, some firms, like HKVAEX, have withdrawn their applications. On March 28, 2024, this firm—one suspected of being connected to Binance—rescinded its license application. Huobi HK and OKX HK also withdrew their applications earlier this year.
Because of these challenges, Bullish and Crypto.com are still on the SFC’s pending applicant list. Thanks to those ongoing inspections, the regulator could soon grant more licenses.
