Hong Kong is known to be a crypto-friendly jurisdiction. In fact, it has time and again been branded as one of the top digital asset hubs. Companies like Animoca are also contemplating to get listed on the local bourse here.
However, it is not all rainbows and sunshine at the moment. A recent report brought to light that crypto exchanges are currently facing challenges to get full licenses.
Hong Kong’s Securities and Futures Commission [SFC] has found “unsatisfactory practices” at some of the to-be-licensed platforms during its on-site inspections.
The focus of the inspections revolved around assessing the standards of safeguarding client assets and know-your-client procedures.
A spokesperson for the regulatory agency highlighted that if platforms "do not remedy critical deficiencies identified during on-site inspections, the SFC may opt to remove their deemed-to-be-licensed status or refuse their license applications.”
Without revealing which firms failed to adhere to the requirements, unnamed sources said,
“Some of the crypto firms are overly reliant on a handful of executives to oversee the custody of client assets, while others aren’t properly guarding against cybercrime risks.”
The inspections, however, are ongoing and subject to change. The exchanges in question include the likes of Crypto.com, Bullish, HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin, and Matrixport HK.
Full licenses will likely be issued by the end of this year to firms that check all the requirement boxes. If they fail to do so, they will have to initiate the submission process from square one.
Until they are fully licensed, these exchanges have been forbidden to on-board new clients.
While the aforementioned exchanges continue to wrestle with challenges, exchanges like Huobi HK, OKX, Bybit, and VAEX have already withdrawn their licensing applications in Hong Kong.
