The Securities and Futures Commission (SFC) of Hong Kong has issued a stern warning to cryptocurrency exchanges operating without the necessary licenses within its jurisdiction. The SFC’s directive, which came into effect on February 29, 2024, mandates that exchanges that have failed to apply for licenses must initiate winding up procedures. The deadline for completing these procedures is May 31, 2024.
Tightening regulatory oversight and compliance measures
The SFC’s warning represents a significant tightening of regulatory oversight within the cryptocurrency sector in Hong Kong. With the closure of the window for new license applications, non-compliant trading platforms are now under pressure to secure licenses or cease operations before the deadline.
Preparing for regulatory compliance: A message to investors
Investors using virtual asset trading platforms are being advised by the SFC to take early preparatory measures. Users are encouraged to transfer their holdings to licensed operators or those in the process of obtaining licenses to ensure compliance with regulatory requirements.
Currently licensed crypto trading operators and application status
To date, Hong Kong has two formally licensed cryptocurrency trading operators: OSL Digital Securities and HashKey Exchange. Moreover, the SFC has received applications from 22 additional trading platforms, indicating a strong interest in regulatory compliance within the industry.
Operational limitations and marketing restrictions during the wind-up period
During the wind-up period, non-compliant exchanges will be subjected to operational limitations and a blanket ban on marketing activities within Hong Kong. The SFC aims to minimize risks by maintaining a public list of exchanges set for closure, thereby ensuring transparency for investors and stakeholders.
Licensed crypto exchanges: Trading capabilities and regulatory approvals
Once licensed by the SFC, cryptocurrency exchanges are authorized to onboard retail investors and facilitate trading activities for popular digital assets such as bitcoin (btc) and ethereum (eth). The SFC is also actively reviewing various altcoins and stablecoins for trading approval, expanding the range of permissible assets on regulated exchanges.
Operational challenges at Hong Kong-based crypto exchange BitForex
In a separate development, the Hong Kong-based cryptocurrency exchange BitForex has faced scrutiny following reports of operational disruptions. Users have reported difficulties accessing their accounts, and withdrawal functionalities have been suspended for at least three days. The exchange’s communication channels have remained inactive, fueling concerns among its user base.
The X account of BitForex has not been updated since May 2023, leading to speculation about the exchange’s operational status. Users have encountered a range of issues, from login failures to discrepancies in asset displays on the platform. An investigation by Cointelegraph confirmed the presence of these operational challenges, raising broader concerns about the exchange’s functionality.
