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Post: Hong Kong SFC Crypto Licensing Update: Withdrawals and Regulatory Inspections

Hong Kong SFC Crypto Licensing Update: Withdrawals and Regulatory Inspections

Key Points:

  • Eleven crypto asset companies and exchanges withdrew license applications before the deadline set by the Hong Kong SFC.
  • The SFC plans to conduct on-site inspections of local virtual asset trading platforms still in the regulatory process after the June 1 deadline.
  • Crypto companies were reminded of the licensing requirement by the SFC on May 28, emphasizing the need for compliance before the deadline.
  • Local crypto trading platforms must be licensed or “deemed-to-be-licensed” by the SFC post the June deadline.
  • “Deemed-to-be-licensed” applicants will follow a short-term framework tailored for pre-existing crypto firms in Hong Kong.

Withdrawal of License Applications:

Eleven crypto asset companies and exchanges opted to withdraw their license applications before the deadline, indicating a significant number of entities deciding against pursuing licensing.

Regulatory Inspections by SFC:

The Hong Kong SFC is set to conduct on-site inspections of virtual asset trading platforms that have not completed their regulatory applications past the June 1 deadline, emphasizing the regulator’s strict oversight.

Licensing Reminder:

With a reminder issued on May 28, crypto companies were urged to comply with the licensing requirement before the June deadline, underscoring the importance of regulatory adherence for local entities.

Licensing Requirements Post-Deadline:

After the June deadline, local crypto trading platforms must either obtain an official license or be considered “deemed-to-be-licensed,” aligning with the SFC’s regulatory framework for entities operating in the region.

Deemed-To-Be-Licensed Framework:

Entities falling under the “deemed-to-be-licensed” category will adhere to a short-term regulatory framework tailored for crypto firms existing in Hong Kong before the enactment of the licensing regime, providing a transitional structure for compliance.

Hot Take:

The withdrawal of license applications and the SFC’s stringent regulatory actions signal a pivotal phase in Hong Kong’s crypto market maturation, emphasizing the regulator’s commitment to overseeing the industry’s compliance and structure.

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