Hong Kong's Securities and Futures Commission (SFC) recently granted in-principle approval to 11 cryptocurrency exchanges to continue operating in the city.
This marks the first step towards the issuance of Virtual Asset Trading Platform (VATP) licenses since 2022. The move comes as Hong Kong aims to establish itself as a prominent cryptocurrency hub alongside global counterparts such as Singapore and Dubai.
Hong Kong's cryptocurrency exchange scene faces regulatory hurdles
According to the South China Morning newspaper a reportAmong the approved exchanges, Crypto.com, originally founded in Hong Kong and now operating out of Singapore, stands out as the largest “deemed licenced” exchange.
Notably, it is the only exchange in the top 20 in terms of 24-hour trading volume according to CoinGecko, which is still seeking a license in Hong Kong. Bullish, which is incorporated in Gibraltar but also operates out of Singapore and New York, is the next major exchange to be considered licenced.
under New regulations Introduced last year, cryptocurrency exchanges must obtain approval for corporate arrangements to continue operating while awaiting full license approval.
The deadline for exchanges not seeking a license to cease operations was June 1. However, some exchanges have withdrawn their license applications due to complications arising from regulatory changes.
Many of the exchanges that withdrew their applications had ties to mainland China, where they were originally founded but have since left. Beijing campaign On digital codes. Notable exchanges include local affiliates of major platforms such as OKX, Binance, HTX, KuCoin, Gate.io, and most recently Bybit.
The Hong Kong government has stressed compliance with regulations, including measures to prevent mainland Chinese residents from accessing recently approved cryptocurrency and instant-transaction platforms Bitcoin (BTC) and cryptocurrencies. Ethereum (ETH) Markets for exchange-traded funds (ETFs).
Market confidence shaken?
According to the report, the withdrawals raised concerns about the progress Hong Kong has made in attracting cryptocurrency-related companies and developing the thriving Web3 ecosystem. The city began its efforts to become a cryptocurrency hub in late 2022.
Legislative Council member Duncan Chiu, who represents the IT sector, expressed in an op-ed that the recalls had shaken market confidence in local companies. Web development 3. Despite hopes of reaching mainland Chinese customers, Beijing imposes a strict ban on commercial cryptocurrency activities on the mainland.
The financial authority of Shenzhen, a city neighboring Hong Kong, recently issued a warning against cross-border cryptocurrency trading, stressing that such activities are “illegal and subject to criminal liabilities.”
The notice also highlighted the risks of cryptocurrency-related fraud and reiterated the illegality of providing internet services to mainland customers without approval.
Overall, Hong Kong granting in-principle approval for stock exchanges represents an important step in the city's regulatory journey towards becoming an innovation hub. However, challenges remain, including withdrawal Exchanges With relations with mainland China and a strict ban on commercial digital asset activity in Beijing.
The future of Hong Kong's virtual assets market will depend on balancing regulatory compliance, market confidence and attracting companies within the evolving global cryptocurrency landscape.
As of press time, the largest cryptocurrency on the market, Bitcoin, is trading at $69,200 after briefly rising towards the $70,400 mark in the early hours of Monday's trading session.
Featured image from Unsplash chart from TradingView.com