Hong Kong has announced that it will begin licensing digital asset exchanges by the end of 2024, following a five-month review of the crypto industry. During Hong Kong’s annual Fintech Week event, Eric Yip, Executive Director for Intermediaries at the Securities and Futures Commission (SFC), confirmed this move. Yip explained that platforms will initially operate under preliminary permits before obtaining full licenses, contingent on compliance with the SFC’s rigorous standards. To align with these requirements, many exchanges have already directed significant resources toward compliance, responding to SFC’s feedback, and establishing sustainable, compliant business models.
Yip went further to explain that such licensing standards are, in effect, to provide a secure and stable backdrop when it comes to the trading of digital assets in Hong Kong while at the same time encouraging innovation. Once these standards are met, licensed exchanges can transact fully as Hong Kong assures a systematic but encouraging approach to the industry.
Also Read: Hong Kong Embarks on Crypto Hub Dreams as SFC Takes a Stern Stance on Licensing
New Regulatory Measures for OTC Desks and Custodial Services
In addition to licensing digital asset exchanges, Hong Kong aims to regulate over-the-counter trading desks and custodians. These measures are intended to extend digital asset rules, protect investors, and help the market’s development. Also, HKEX has said that it plans to develop a Virtual Asset Index Series together with the launch of Bitcoin and Ether pricing indexes for the Asia-Pacific region’s trading hours. This localized index is meant to increase transparency and set viable valuation standards on regional markets where they are most needed.
AI Guidelines and Virtual Asset Tax Incentives
Hong Kong’s regulatory updates include its first AI policy guidelines for the financial sector. Secretary for Financial Services and the Treasury Christopher Hui Ching-yu, introduced this dual-track policy to encourage AI adoption in finance while addressing regulatory challenges. The guidelines provide a framework for balancing AI’s potential benefits and risks, reflecting Hong Kong’s commitment to responsible innovation.
Additionally, Hui announced expanded tax incentives for virtual asset ownership, aiming to attract international investors and strengthen Hong Kong’s position as a global digital asset hub. These incentives signal Hong Kong’s dedication to fostering a competitive, regulated digital asset ecosystem, positioning itself as a leader in the global digital finance landscape.
Also Read: Hong Kong Police Arrest 25 in Major Cryptocurrency Scam and Money Laundering Operation
