- Hong Kong SFC mandates a one-year transition for VATP licensing, effective June 1, 2023.
- By May 31, 2024, 11 firms withdrew license applications due to restrictions on mainland Chinese users.
The Hong Kong Securities and Futures Commission (SFC) published a circular on the interim arrangements for the licensing system and manual for the Virtual Asset Trading Platform (VATP) on May 31, 2023.
With effect from June 1, 2023, this new system has a one-year transition period that ends on June 1, 2024. Virtual asset trading platforms in Hong Kong within this time frame have to either close their doors by the deadline or get a license from the relevant bodies.
A Hong Kong legislator published an article criticizing Hong Kong's cryptocurrency licensing system for shaking market confidence. Not only are large exchanges such as Binance OKX unable to obtain licenses, but companies that obtain licenses also find it difficult to make a…
— Wu Blockchain (@WuBlockchain) June 2, 2024
License Withdrawals Due to Stringent Requirements
Many well-known sites withdrew their license applications between March and May of 2024. Said to be under Binance, HKVAEX withdrew its application on March 28, 2024. Following this were IBTCEX, QuanXLab, Huobi HK, Gate HK, OKX HK, and Bybit (Spark Fintech Limited) throughout May 2024.
11 firms had withdrew or returned their license applications by the end of May, leaving 17 platforms remaining on the application list.
It is known, the main cause of these withdrawals is the SFC’s requirement that all applicants sign a letter of commitment guaranteeing they will not have mainland Chinese users in any location.
Typical offshore exchanges find it difficult to meet this requirement. OKX established an industrial alliance to protest this mandate, but in the end, the effort failed.
Industry sources say that the withdrawing parties can revise their frameworks or legal systems and reapply later. They are cautioned against, however, employing trademarks that are unduly evocative of offshore exchanges.
Current Licensed Applicants
Eleven platforms have now submitted license applications: HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixincom, xWhale, YAX, Bullish, Cryptocom, WhaleFin, and Matrixport HK.
As of this moment, only OSL and HashKey hold official licenses. It’s interesting to note that Wu Jihan founded Matrixport, a bitcoin financial management company, while PantherTrade is a division of the traditional Internet trading company Futu.
Hong Kong’s Commitment to Financial Innovation
ETHNews previously reported that Hong Kong government representatives are dedicated to completely advancing financial innovation. Important fields covered by this include virtual assets, DeFi connected to Web3, ecologically friendly finance, and financial technology.