Through the efforts of Hong Kong securities, 11 new exchanges in cryptocurrency are awaiting approval, including Crypto. Com and Bullish. This is within the broader strategies Hong Kong seeks to implement to establish itself as a global node for digital assets. The Securities & Futures Commission (SFC) explained the plan and noted that these exchanges are now “deemed to be licensed” until they meet all regulatory requirements.
This allows these exchanges to conduct their activities legally and market themselves to residents. Still, some giant exchanges, such as OKX, pulled out their applications, while others, like Binance, Coinbase, and Kraken, did not submit their applications in the first place. By June 1, any exchange offering digital asset trading services in Hong Kong should at least be categorized as licensed.
Hong Kong Boosts Bid as Crypto Hub
The journey to make Hong Kong a virtual asset hub was initiated during the fourth quarter of 2022 to halt the decline of financial center function due to political discontent. They will further increase the number of licensed exchanges to operate in the country, launch spot Bitcoin and Ether ETFs, provide the legal framework for using stablecoins, and issue bonds in the digital space.
While categorizing with Dubai and Singapore, Hong Kong has a relatively more stringent legal framework for enhancing investor protection and mitigating the risks of money laundering and terrorism financing activities. In this respect, the above regulations are also costly because they call for implementation. Only two platforms – HashKey Exchange and OSL Group – have received all the necessary licenses. To be more precise, on or before February 29, around 23 firms have applied to operate crypto exchanges.
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VPN Use Grows Amid Hong Kong Bans
In the past, Hong Kong has acted as a gateway to mainland China’s opportunities in the region. However, Beijing’s ban on the trading of digital assets restricts mainland investors from gaining access to Hong Kong-based crypto exchanges and ETFs. However, as reported by the local media, more people are using Crypto as a medium to invest in other assets because homes are becoming cheaper and overseas transfers are limited. This demand has been propelled by the rising worth of bitcoin starting early this year, 2023.
This is because the industry has been characterized by operating in gray territories, as evidenced by the recent FTX failure and Binance’s exposure to about $4. The company faced a 3 billion fine for non-compliance with the provisions of US laws. Last year in Hong Kong, the drama of the JPEX exchange threatening to turn the crypto world into a nightmare left regulators shaken. The use of Virtual Private Networks and Peering technology also makes it possible for users to bypass some of the restrictions.
Hong Kong has recently given out eleven new licenses to cryptocurrency exchanges to ensure that the city-state fully realizes its dream of becoming a world center for digital asset trading. The competition and regulation issues remain the major factors that impact the development of the crypto market in the city; however, various strategic plans for further business development and stringent legal requirements for cryptocurrency companies are implemented to increase investors’ confidence and attract more players to the market.
