Who are the licensed 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 be licensed by the Securities and Futures Commission (SFC) under the Anti-Money Laundering Ordinance. Failure to comply will result in criminal liability for the trading platforms, and the SFC will take enforcement action. However, 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been licensed by the SFC, including OSL Exchange and HashKey Exchange, while several platforms, including OKX, have withdrawn their license applications.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 SFC’s latest announcement, there are currently only two officially licensed exchanges: OSL Exchange (OSL Digital Securities Limited) and HashKey Exchange. Additionally, there are 11 exchanges on the “to be confirmed” list for licensing.
HashKey Exchange is the first licensed trading platform in Hong Kong to cater 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 top executives from renowned financial giants such as HSBC and Morgan Stanley.
Surprisingly, there are 12 exchanges that either failed to meet the requirements or withdrew their license applications, including OKX and Bybit. Notably, global giants like Binance and Coinbase are also absent from the list of applicants.
Why did these exchanges choose to withdraw their applications?
Hong Kong has actively embraced the cryptocurrency industry this year, attracting numerous startups and businesses to set up operations in the city. This has brought in a wealth of talent and opportunities, prompting Hong Kong to focus on regulating the cryptocurrency industry, providing a legal framework for startups to conduct their businesses.
The licensing regime was expected to make Hong Kong the Web3 hub of Asia, generating great anticipation from exchanges and investors. So why did so many exchanges ultimately choose to withdraw or not apply?
Lu Zijian, the Director of Operations at BingX Asia Pacific, recently stated in a Facebook post that it is not surprising to see many exchanges withdrawing their applications because the current environment is not very friendly towards exchanges.
Hong Kong only accepts support for 20 cryptocurrencies and supports USD and HKD as fiat currencies. The stablecoin USDT is only available for trading pairs with Bitcoin (BTC) and Ethereum (ETH). Lu Zijian mentioned that the daily trading volume in Hong Kong is only around $10 million, and with these restrictions, the operational compliance costs for exchanges would far exceed the trading volume brought by obtaining a license.
According to FT Chinese, Livio Weng, the CEO of HashKey Exchange, stated that the cost of applying for a license in Hong Kong is at least several million Hong Kong dollars, and for HashKey, which is already in operation, the investment amount is even higher, reaching 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 direction, which is much better than the previous “feeling our way across the river” stage.
Reference:
SFC
