11 Hong Kong Crypto Exchanges ‘Deemed to Be Licensed’, Paving the Way for First Approvals from 2022

The Hong Kong Securities and Futures Commission has granted initial approval to 11 cryptocurrency exchanges to continue operating in the city, in the first step towards granting the first virtual asset trading platform (VATP) licenses from 2022.

Crypto.com, which was founded in Hong Kong and now operates from Singapore, is the largest of the “deemed authorized” exchanges. The city currently has only two exchanges approved to serve retail customers, with HashKey being the latest to get a license in 2022 under the previous voluntary scheme.

Under new regulations passed last year, the presumptive agreement is necessary for exchanges to continue operating in the city pending full approval of their licenses after June 1, at which point exchanges that did not require a license were required to cease operations .

Crypto.com is the only exchange in the top 20 by 24-hour trading volume, as measured by CoinGecko, which is still seeking a license in Hong Kong. The second largest exchange believed to be licensed is Bullish, which is based in Gibraltar but also operates from Singapore and New York.

Bullish also has strong ties to Hong Kong. It’s been a fixture at crypto events around town, and CoinDesk, which Bullish acquired last year, recently announced it is bringing its major consensus crypto conference in town next year.

There are still six IVAP operators applying for a license without a status update on the SFC website.

The deal’s rumored approvals come soon after several exchanges withdrew their license applications under the new virtual asset scheme, which the Hong Kong government hoped would provide the regulatory clarity needed to transform the city into a crypto hub on par with Singapore or Singapore. Dubai.

Most of the exchanges that withdrew had ties to mainland China, where they were founded but abandoned after Beijing’s crackdown on digital tokens. These include local affiliates of major exchanges such as OKX, Binance, HTX, KuCoin, Gate.io and, most recently, Bybit, which withdrew on May 31.

In a notice last week, the SFC said exchanges should take steps to follow all laws and regulations, including “preventing residents of mainland China” from accessing cryptocurrencies on their platforms. Barring exchanges from serving the mainlands has dampened enthusiasm for operating in Hong Kong, an industry insider previously told the post.

The withdrawals have raised questions about the progress of Hong Kong’s pivot to attract cryptocurrency business to the city, an effort that began in late 2022. In an article published by the Hong Kong Economic Journal on Saturday, Legislative Council member Duncan Chiu, who representing the information technology industry, wrote that the recalls have “shaken market confidence” in Web3’s local development.

Many in the cryptocurrency industry have been maintaining hope that Hong Kong could be a means to access mainland customers. However, Beijing maintains a strict ban on cryptocurrency-related business activities on the mainland.

On Sunday, the financial authority in Shenzhen, the city just north of the Hong Kong border, issued a warning about speculation in cross-border cryptocurrency trading.

Cryptocurrencies do not have the same legal status as fiat currency, and assets-related activities are illegal and subject to criminal liability, the local Shenzhen Financial Supervision and Administration Bureau said in a notice posted on its website. The regulator has noted a recent increase in cryptocurrency-related fraud, which it says poses a serious danger to Chinese citizens.

The notice also reiterates that it is illegal to provide internet services to mainland customers without approval. In 2021, a notice from the People’s Bank of China stating that it is illegal for exchanges to serve mainland citizens has accelerated the withdrawal from the market.

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