Hong Kong’s Regulatory Advancements in Virtual Asset Trading

The Securities and Futures Commission (SFC) of Hong Kong, SAR, announced plans to issue additional licenses for virtual asset trading platforms by the end of 2024, marking a significant step toward a regulated cryptocurrency market.

Dr. Eric Yip, SFC Executive Director, reported strong transaction growth in Hong Kong’s virtual asset sector from 2023 to 2024. He highlighted that three virtual asset trading platforms (VATPs) are currently licensed, with 14 more applications under review, as shared at Hong Kong FinTech Week.

The SFC has conducted all on-site inspections and provided feedback to applicants, gaining firsthand insights into their compliance levels. These inspections enabled the SFC to engage directly with company personnel and, crucially, their ultimate controllers, ensuring they understand SFC’s regulatory expectations.

The regulator has implemented an expedited licensing process, completing inspections for all “deemed” VATP applicants that were operational in Hong Kong before June 2024. The SFC aims to license several of these platforms to operate under restricted conditions, with the possibility of full operational clearance after a third-party review.

This regulatory push reflects Hong Kong’s strategy to balance market innovation with investor protection, a principle reinforced by the SFC’s “same business, same risks, same rules” approach.