Recent Regulatory Developments: Hong Kong’s SFC Lists Unlicensed Crypto Exchange MEXC on Its Cautionary List
Hong Kong’s SFC Takes Action Against Unlicensed Crypto Exchange MEXC
In a recent regulatory move, the Securities and Futures Commission (SFC) of Hong Kong added the cryptocurrency exchange MEXC to its cautionary list on March 15, 2023. This action signifies the SFC’s commitment to ensuring compliance within the crypto industry, with a particular focus on licensing requirements for operating in Hong Kong.
MEXC’s Non-Compliance with SFC’s Regulations
MEXC has come under the scrutiny of Hong Kong’s SFC for promoting its services to investors in the region without obtaining the required licenses, specifically the Virtual Asset Trading Platform (VATP) license. The absence of proper licensing places MEXC in violation of Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance, which considers operating a virtual asset exchange without authorization as an unlawful act.
Impact of SFC’s Warning on Crypto Entities and the Market
The SFC’s warning to MEXC serves as a reminder for all crypto entities to comply with regulatory requirements and avoid any legal consequences. This action follows the addition of Bybit crypto exchange to the cautionary list, highlighting the regulatory scrutiny faced by unlicensed crypto exchanges in Hong Kong.
MEXC’s Significance and Impact on the Crypto Market
Despite being unlicensed, MEXC remains a notable player in the crypto market. It ranks as the world’s 11th-largest cryptocurrency exchange by trading volume, with a substantial daily trading volume of over $2.19 billion and access to more than 1,942 cryptocurrencies. MEXC’s large user base attracts over three million weekly visits.
SFC’s Previous Actions Against Fake Crypto Websites
The SFC has previously taken action against fake websites impersonating legitimate local crypto exchanges. On March 4, 2023, the SFC issued a warning regarding multiple suspicious sites posing as licensed trading platforms like OSL Digital Securities and Hash Blockchain Limited (also known as HashKey). The SFC also blacklisted eight domains impersonating MEXC on February 9, 2023.
Regulatory Compliance and the Future of Crypto Exchanges in Hong Kong
Crypto exchanges operating in Hong Kong were mandated to submit VATP applications by February 29, 2023. Failure to comply with this requirement means unlicensed firms must cease operations in the Special Administrative Region by May 31, 2023. Additionally, exchanges with rejected VATP applications must vacate the city within three months. These regulations emphasize the significance of regulatory adherence in the crypto industry, ensuring a secure and transparent trading environment for investors in Hong Kong’s evolving crypto landscape.
Currently Licensed Crypto Exchanges in Hong Kong
As of now, only two crypto exchanges hold official licenses from the SFC. OSL Exchange obtained its license on December 15, 2020, while HashKey Exchange was licensed on November 9, 2022. These licensed exchanges serve as benchmarks for regulatory compliance within the industry, providing investors with a secure and transparent trading environment in Hong Kong’s evolving crypto landscape.
