SFC Reminds Virtual Asset Trading Platforms of Licensing Deadline

SFC Reminds Virtual Asset Trading Platforms of Licensing Deadline

by May 30, 2024

The Securities and Futures Commission (SFC) reminds the public that the non-contravention period for virtual asset trading platforms (VATPs) operating in Hong Kong under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615) (AMLO) will end on 1 June 2024.

All VATPs in Hong Kong must be either licensed by the SFC or deemed-to-be-licensed applicants under the AMLO.

Operating a VATP without proper licensing is a criminal offence, and the SFC will take appropriate action against any breaches.

Reminder for investors

Investors are urged to trade virtual assets only on SFC-licensed VATPs. The “List of licensed virtual asset trading platforms” on the SFC’s website should be checked to ensure the VATP being used is formally licensed.

It is important to note that the SFC does not formally license deemed-to-be-licensed VATP applicants.

These applicants, who operated in Hong Kong before the new VATP licensing regime, must demonstrate the effectiveness of their compliance measures to the SFC’s satisfaction.

Reminder for deemed-to-be-licensed VATP Applicants

Deemed-to-be-licensed VATP applicants and their ultimate owners must comply fully with the SFC’s regulatory requirements and licensing conditions.

The SFC expects these applicants to refrain from actively marketing their services or onboarding new retail clients until they have met all regulatory requirements and been formally licensed.

All VATPs and their ultimate owners must also comply with applicable laws, including preventing Mainland Chinese residents from accessing their services.

Necessary measures must be taken to ensure compliance. The deeming arrangement is temporary and aims to balance investor protection with market development. Non-compliance with key regulatory requirements will lead to the SFC swiftly refusing a licence application.

In the coming months, the SFC will conduct on-site inspections of deemed-to-be-licensed VATP applicants to ensure compliance with regulatory requirements, particularly regarding client asset safeguarding and know-your-client processes.

Any noted non-compliance will result in refusal of the licence application and appropriate regulatory action.

Ongoing developments in the licensing process

An increasing number of crypto firms are withdrawing their applications for VATP licenses in Hong Kong. Recent withdrawals include Willows Asia Technology Company Limited (IBTCEX), QuanX Lab Limited, and HBGL Hong Kong Limited (Huobi HK).

Other firms such as AMMBR (HK) LIMITED, BitHarbour (Hong Kong) Limited, Meex Digital Securities Limited, BX SERVICES LIMITED (HKVAEX), and OKX Hong Kong have also withdrawn their applications.

To date, only OSL Digital Securities Limited and Hash Blockchain Limited have been awarded digital asset licenses in Hong Kong. Meanwhile, 20 applicants, including global platforms like Matrixport, Crypto.com, and Bybit, are still pursuing VATP licenses.

The SFC has stipulated that virtual asset trading platforms must submit their licence applications by 29 February 2024 or cease operations by 31 May 2024. Investors using these platforms should prepare for potential disruptions.

Featured image credit: Edited from Freepik