Four More Virtual Asset Trading Platforms Licensed in Hong Kong

Hong Kong Securities and Futures Commission (SFC) Approves Four New Virtual Asset Trading Platforms (VATPs)

The Hong Kong Securities and Futures Commission (SFC) has made significant progress in regulating the virtual asset trading platforms (VATPs) by approving four new firms, bringing the total number of licensed VATPs to eight. The newly approved exchanges are Accumulus GBA Technology (Hongkong), DFX Labs, Hong Kong Digital Asset EX, and Thousand Whales Technology (BVI).

Rigorous Licensing Process Ensures Investor Protection

The SFC’s rigorous licensing process involves on-site inspections and feedback from the agency to ensure that VATPs meet the required regulatory standards. The newly approved exchanges underwent this process and demonstrated their compliance with the SFC’s expectations.

As part of the approval, the new exchanges will operate in a restricted scope and must perform vulnerability assessments and penetration tests through an independent third party with satisfactory results before operating restrictions are lifted. The SFC will supervise this process to ensure that investor interests are safeguarded.

A Balance Between Investor Protection and Industry Development

SFC Executive Director of Intermediaries Eric Yip emphasized the importance of striking a balance between protecting investors’ interests and facilitating the development of the virtual asset ecosystem. "We have been proactively engaging with VATPs’ senior management and ultimate controllers, which helps drive home our expected regulatory standards and expedite our licensing process for VATPs," he said.

The SFC’s goal is to create a fair and transparent environment that promotes innovation while protecting investors from potential risks associated with virtual assets. The agency’s approach demonstrates its commitment to fostering a healthy and sustainable ecosystem for the development of virtual assets in Hong Kong.

VATP Licensing Process: A Step-by-Step Guide

The SFC’s VATP licensing process involves several steps, including:

Application Submission: VATPs submit their applications to the SFC, which includes providing detailed information about their business operations and compliance with regulatory requirements.
On-Site Inspections: The SFC conducts on-site inspections of the VATPs’ premises to ensure that they meet the required standards for safeguarding client assets, Know Your Customer (KYC) processes, and cybersecurity.
Feedback and Response: The SFC provides feedback to the VATPs, which must respond to address any concerns or issues raised by the agency.
Licensing Decision: The SFC makes a decision on whether to grant a license to the VATP based on its compliance with regulatory requirements.

A Total of 11 VATPs Remain in the Application Process

While four new exchanges have been approved, eleven VATPs remain in the application process. Seven of these exchanges are considered "deemed-to-be-licensed," which means they conform to Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance.

More Exchanges Likely to be Approved

SFC CEO Julia Leung has stated that new licenses will be granted in batches as part of the agency’s roadmap through 2026. This approach aims to advance regulation, promote real-world asset tokenization, and explore blockchain technology.

Only Four Cryptocurrencies are Currently Available for Purchase in Hong Kong

Despite the growth of virtual assets in Hong Kong, there are currently only four cryptocurrencies available for purchase in the territory: Bitcoin (BTC), Ether (ETH), Avalanche (AVAX), and Chainlink (LINK).

Retail Cryptocurrency Trading was Legalized in August 2023

The SFC has been actively promoting the development of the virtual asset industry in Hong Kong. Retail cryptocurrency trading was legalized in August 2023, providing greater opportunities for investors to participate in this emerging market.

Looking Ahead: A Bright Future for Virtual Assets in Hong Kong

The approval of four new VATPs by the SFC demonstrates the agency’s commitment to fostering a healthy and sustainable ecosystem for virtual assets in Hong Kong. As the industry continues to grow and develop, it is likely that more exchanges will be approved, providing greater opportunities for investors to participate in this exciting market.

Related Articles

Subscribe to the Law Decoded Newsletter

Stay up-to-date with the latest news and developments on cryptocurrency laws and guidelines. Our weekly newsletter delivers insightful analysis and expert commentary on the regulatory landscape for virtual assets.

By subscribing, you agree to our Terms of Service and Privacy Policy.