As a researcher with experience in the financial industry and a keen interest in the crypto space, I find Hong Kong’s recent approval of 11 cryptocurrency exchanges to continue operating under deeming arrangements an intriguing development. This marks the first step towards issuing virtual asset trading platform (VATP) licenses since the new regulations were introduced last year.
The Hong Kong Securities and Futures Commission (SFC) has given its preliminary green light to 11 cryptocurrency trading platforms, allowing them to carry on their operations within the city.
Starting from this point, Hong Kong will begin granting licenses for virtual asset trading platforms (VATPs) for the first time since 2022. This action is part of Hong Kong’s plan to solidify its position as a major player in the crypto industry alongside international competitors such as Singapore and Dubai.
Hong Kong’s Crypto Exchange Scene Faces Regulatory Hurdles
Based on a South China Morning Post article, Crypto.com, which was initially established in Hong Kong but currently operates from Singapore, is identified as the largest among the approved exchanges with a valid license.
As an analyst, I’ve noticed that Bullish, with its significant trading volume among the top 20 exchanges according to CoinGecko, is the only one yet to obtain a license in Hong Kong. Meanwhile, Bullish, which is incorporated in Gibraltar but also has operations in Singapore and New York, is the next notable exchange that has been granted a license.
With the recent regulatory update, I find that cryptocurrency exchanges must now secure approval for their deeming arrangements to keep functioning temporarily, while they go through the process of obtaining full licensing.
Exchanges without licensed status had until June 1 to halt operations. Nevertheless, certain exchanges have withdrawn their application submissions for licenses due to the intricacies brought about by regulatory adjustments.
Multiple exchanges that withdrew their applications were linked to China, which was their original home but from which they departed after China tightened regulations on digital currencies. Notable exchanges with this background include the Chinese branches of OKX, Binance, Huobi Global (HTX), KuCoin, Gate.io, and most recently, Bybit.
The Hong Kong administration strongly advocates for adherence to regulations in relation to cryptocurrencies. This includes implementing restrictions to limit mainland Chinese residents from using crypto platforms, as well as permitting the launch of Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) in recognized markets.
Market Confidence Shaken?
According to the findings in the report, the increase in withdrawal activities has sparked doubts regarding Hong Kong’s advancement in luring crypto-related enterprises and cultivating a prosperous Web3 environment. The city initiated its endeavors to establish itself as a crypto hub towards the end of 2022.
As a legislative council member with a focus on the information technology sector, I penned an opinion piece voicing my concerns over recent withdrawals in the local Web3 development scene. Although there’s enthusiasm for expanding our reach to mainland Chinese markets, it remains challenging due to Beijing’s unyielding prohibition on commercial crypto activities within their borders.
Shenzhen’s financial regulatory body has issued a stern reminder against engaging in unlawful cryptocurrency transactions across its border with Hong Kong. They clarified that these actions are not only prohibited but also punishable by criminal penalties.
As a crypto investor, I’ve received a warning that underlined the risks of falling prey to crypto-related scams. Moreover, it reminded me that offering online crypto services to residents on the mainland is against the law and remains unauthorized.
As a crypto investor, I’m thrilled about Hong Kong’s initial approval of cryptocurrency exchanges, which is a major milestone in its regulatory evolution towards being a hub for innovation. However, there are hurdles to overcome, such as distancing ourselves from exchanges with connections to the mainland and dealing with Beijing’s stringent ban on commercial digital asset activities.
As a crypto investor, I believe the success of Hong Kong’s virtual asset market hinges on finding the right equilibrium between adhering to regulations, fostering market trust, and drawing in businesses amidst the ever-changing global cryptocurrency scene.
At present, I find Bitcoin, the most extensive cryptocurrency currently available, being exchanged at a price of around $69,200. Just this morning, its value momentarily reached the notable height of $70,400 during trading activities.
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2024-06-04 04:12