Who are the licensed cryptocurrency exchanges in Hong Kong?
In recent years, Hong Kong has begun regulating cryptocurrencies. Starting from June 1, 2024, all virtual asset exchanges operating in Hong Kong must obtain a license from the Hong Kong Securities and Futures Commission (SFC) according to the Anti-Money Laundering Ordinance. Failure to comply will result in criminal liability for the trading platform, and the SFC will take enforcement actions. Currently, only two platforms have been licensed by the SFC, including OSL Exchange and HashKey Exchange, while several platforms, including OKX, have withdrawn their license applications.
According to the latest announcement from the SFC, the only two exchanges that have been officially licensed are OSL Exchange (OSL Digital Securities Limited) and HashKey Exchange. There are also 11 exchanges on the “pending list” of licensed exchanges.
HashKey Exchange is the first licensed trading platform in Hong Kong that caters to retail investors. It raised nearly $100 million in Series A funding earlier this year, officially becoming a cryptocurrency “unicorn.” OSL Exchange, on the other hand, is a Hong Kong-based fintech company, with senior executives from renowned financial giants such as HSBC and Morgan Stanley.
Surprisingly, there are 12 exchanges that have either failed to meet the requirements or have withdrawn their license applications. This includes OKX and Bybit, while global giants like Binance and Coinbase are not on the list of applicants.
Why did exchanges choose to withdraw their applications?
Hong Kong has actively embraced the cryptocurrency industry this year, attracting numerous startups and companies to establish a presence in the city. This has brought in a significant influx of talent and opportunities for Hong Kong. The city has also started prioritizing the regulation of the cryptocurrency industry, allowing startups to operate legally and with a solid foundation.
The licensing regime was expected to make Hong Kong the Web3 hub of Asia, generating high expectations from both exchanges and investors. So why did so many exchanges choose to withdraw or not apply?
Lu Zi Jian, the Managing Director of BingX Asia Pacific, recently stated in a Facebook post that it is not surprising to see so many exchanges withdraw their applications because the current environment is not very friendly towards exchanges.
Hong Kong only supports 20 cryptocurrencies and accepts USD and HKD as fiat currencies. The stablecoin USDT can only be traded against Bitcoin (BTC) and Ethereum (ETH). Lu Zi Jian stated that the daily trading volume in Hong Kong is only about $10 million, and combined with these restrictions, the compliance costs for exchanges far exceed the trading volume brought by obtaining a license.
According to FT Chinese, Livio Weng, the CEO of HashKey Exchange, mentioned that the cost of applying for a license in Hong Kong is at least several tens of millions of Hong Kong dollars, and for established operations like HashKey, the investment can reach tens of millions of US dollars.
Although the SFC may not have enough manpower to conduct comprehensive reviews of all Web3 institutions, Weng believes that the current situation at least demonstrates Hong Kong’s development path, which is much better than the previous period of “feeling our way across the river.”
References:
Securities and Futures Commission