Hong Kong: A Blossoming Hub for the Crypto Industry Amidst Intense Competition
The crypto industry is witnessing significant growth in Hong Kong, with a remarkable 24 businesses applying for licenses to operate digital-asset exchanges within the jurisdiction. This development comes as the city aims to establish itself as a regulated hub for the industry, attracting heavyweights such as Bybit, OKX, Crypto.com, Gate.io, HTX, Bullish, and others.
Hong Kong’s Attraction: 24 Applicants for Crypto Exchange Permits
The race to become a prominent player in Hong Kong’s digital asset market has commenced with 24 applicants seeking licenses to operate exchanges. Notably, the deadline for applications was on February 29, and platforms that missed the cut-off must cease operations by May 31, 2024.
The crypto sector’s evaluation of these applicants will serve as a barometer for Hong Kong’s appeal as a digital asset center, pitted against competition from other jurisdictions. The city’s nine-month-old virtual asset code emphasizes investor protection, potentially deterring some enterprises due to the associated compliance costs.
Binance and Other Major Players Miss Out on the Deadline
Major crypto exchanges, including Binance, Coinbase from the US, and Kraken, were not part of the applicant list. Hong Kong’s focus on developing a crypto hub in late 2022 has attracted two permitted digital asset exchanges: HashKey Exchange and OSL Group.
OSL’s Challenges Amidst Licensing Applications
Gary Tiu, OSL Group’s head of regulatory relations, acknowledged that the developing regulatory landscape will impact their business model, and expenses must be carefully considered.
Matrixport’s Proactive Compliance Approach
Despite the competition, Matrixport, a significant player in the cryptocurrency space, has shown dedication to regulatory compliance. On February 26, the company requested a virtual asset trading license from the Hong Kong Securities and Futures Commission (SFC).
Addressing Suspect OTC Trade
In parallel efforts, regulators are cracking down on suspect over-the-counter (OTC) trade. Approximately 450 businesses, including shops, ATMs, and contact platforms, facilitate OTC crypto trading in Hong Kong, contributing to a substantial portion of the city’s $64 billion in digital asset transactions. Four exchanges (Ammbr, BitHarbour, Huobi HK, and Meex) previously applied for licenses but either withdrew or had their applications returned.
The SFC intends to publicly track and alert the public about cryptocurrency sites that will eventually be forced to close down by law. During the shutdown, exchanges’ capacity to operate will be limited, and regional marketing will be disabled. By June 1, 2024, the Hong Kong SFC will publish a directory of cryptocurrency exchanges that have secured a license. However, not all names on the list are guaranteed a license.
Hong Kong: A Regulated Haven for the Crypto Industry
In conclusion, Hong Kong’s crypto sector is experiencing a period of transformation as it seeks to position itself as Asia’s crypto capital. By attracting committed players and addressing regulatory challenges, Hong Kong can build trust and stability in the evolving digital asset market.
