Growing a new regulatory environment paved the way for establishing Hong Kong’s cryptocurrency hub amid the critical compliance deadline. Recently, the Hong Kong Securities and Futures Commission said on Tuesday that the company would carry out physical checks of all cryptocurrency trading platforms that seek the license to operate. This move will help DF consequently meet the legal requirements and standards.
Currently, by June 1, 2024, all VATPs who are continuing trading services in Hong Kong must be licensed either with SFC or under the status of a “deem to be licensed,” by which SFC has provided specific temporary licenses to allow certain platforms to carry out these trading services in Hong Kong until getting their license. Failure to operate without a license after this period will be an offense that will breach the anti-money laundering and counter-terrorism.
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Hong Kong Firms Face Strict SFC Audits
The SFC’s on-site inspection will center on applicants’ commitments to regulatory requirements, such as preserving customers’ funds and other assets and effectively implementing ‘know your client’ policies and procedures. Currently, only two concerns are listed, namely OSL Digital Securities Limited and Hash Blockchain Limited, which SFC has approved. The number of applications in the system crossed 18; as of now, 11 have withdrawn or have been omitted, such as the crypto exchange OKX and Huobi Hong Kong”.
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The SFC does not expect applicants to engage in their services or recruit new retail clients before they have full licenses. Angela Ang, a senior policy adviser for blockchain intelligence firm TRM Labs, and I opined that the SFC’s elevated standard and demands, including on-site assessments, are expected. This observation arises from the argument that the latest withdrawn applications could be part of the SFC’s strategic plan to standardize the process before implementing the deeming arrangement.
As a result, the number of 18 entities officially in the SFC system as “deemed to be licensed” will be decided on June 1. For Hong Kong, which wants to become a significant hub for cryptocurrencies, this can become a problem if several license applications have not met this critical date. A strict inspection procedure can be observed by the SFC, thus reflecting its determination to eliminate illicit activities and sustain the credibility of the crypto market in Hong Kong.
Hong Kong is preparing for changes regarding the regulation of cryptocurrencies since SFC is introducing compliance measures to strengthen its position as a potent crypto-friendly hub. Thus, the following months will be decisive for VATPs, or those companies will have to meet these strict requirements and get their licenses.
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Maxwell Mutuma
Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.