The
Securities and Futures Commission (SFC) of Hong Kong unveiled
a streamlined licensing approach for virtual asset trading platforms (VATPs),
marking another significant shift in the region’s cryptocurrency regulatory
landscape in recent months.
Hong Kong Streamlines Crypto
Trading Platform Licensing Process
The new
framework eliminates the previous two-phase assessment system in favor of a
single, comprehensive external evaluation. Under this streamlined process, VATP
applicants must first implement their operational infrastructure before
undergoing an external assessment, with the SFC actively participating in the
evaluation process.
“The SFC is
committed to fostering a healthy ecosystem and a robust regulatory framework
for the development of virtual assets in Hong Kong,” said Dr Eric Yip, the
SFC’s Executive Director of Intermediaries.
“With the
new approach, we will enhance our collaboration with VATP applicants, providing
them with constructive and timely feedback, thereby enabling fully compliant
VATPs to bring their services to investors more swiftly.”
This marks
another significant change following
the June 1, 2024 decision by the SFC to once again allow retail clients to
trade cryptocurrencies. However, the regulator also imposed additional
responsibilities on firms in the sector, requiring compliance with regulations
or facing legal consequences. The latest move aims to simplify the process of
obtaining a license.
The
revamped process introduces several innovations:
- Tripartite
Engagement – The
SFC will become a direct party to the assessment process, working alongside the
platform operator and external assessor to ensure regulatory compliance. - Streamlined
Evaluation – Applicants
must now deploy all systems and controls before the external assessment begins,
ensuring a more practical and efficient evaluation of operational readiness.
As recently
reported by Finance Magnates, in October, 11
crypto platforms were still under regulatory review after several months.
The industry criticized the local regulator for overly strict regulations,
leading several major players, including OKX and Bybit, to withdraw from the
application process. SFC representatives hope the current changes will
encourage exchanges to enter the market.
This
regulatory development follows the licensing of four VATPs in December 2024,
reflecting Hong Kong’s efforts to strengthen its position as a virtual asset
hub.
This article was written by Damian Chmiel at www.financemagnates.com.
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