The Securities and Futures Commission (SFC) of Hong Kong is accelerating its plan to grant more operating licenses to cryptocurrency exchanges and digital asset companies by the end of 2024. This move reflects Hong Kong’s growing commitment to establishing a regulated and secure environment for digital asset trading.
According to Julia Leung, CEO of the SFC, the regulatory body expects to make significant progress in licensing the 11 virtual asset trading platforms (VATPs) currently on the prospective list. Leung emphasized that licenses will be issued in batches to improve compliance standards across the sector.
Current Licensing Landscape
At present, 16 companies are awaiting decisions on their VATP applications. Although the SFC has advised caution when dealing with these firms, 11 of them are already operating under "deemed-to-be-licensed" status. The SFC has completed its first round of on-site inspections for these crypto businesses.
Leung confirmed that all crypto trading platforms adhering to the SFC’s licensing framework are expected to receive approval. This structured approach aims to enhance market integrity and protect investors.
Broader Regulatory Strategy
This licensing initiative aligns with the SFC’s recently published 2024–2026 roadmap, which outlines key goals such as advancing crypto regulation, promoting real-world asset (RWA) tokenization, and further exploring blockchain technology applications.
Under the proposed framework, the SFC will collaborate with the Customs and Excise Department (C&ED) to supervise firms offering over-the-counter (OTC) crypto trading services.
Retail Trading Limitations
Despite Hong Kong’s ambition to become a global hub for cryptocurrency and fintech, retail investors in the region are currently limited to purchasing only four specific cryptocurrencies. This cautious approach has drawn criticism from those who argue that regulatory progress has been too slow.
Recently Licensed Exchanges
HKVAX recently became the third crypto exchange to receive a license to operate in Hong Kong, joining OSL and HashKey, which were licensed in 2020 and 2023, respectively. This marks a milestone in the gradual but steady opening of Hong Kong’s digital assets market.
Exchanges Awaiting Full Approval
Several other prominent crypto exchanges—including Crypto.com, Bullish, HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin, and Matrixport HK—are still operating under application status and have not yet received full licenses.
The SFC noted that during on-site inspections, it identified compliance issues with some of the exchanges seeking full licensing.
Learning from Past Scandals
Hong Kong’ regulatory tightening also comes in the wake of past industry scandals. In 2023, the collapse of the Dubai-based exchange JPEX drew widespread attention after it was revealed that more than 2,500 Hong Kong residents had been defrauded of an estimated $1.65 billion. The exchange reportedly used tactics such as raising withdrawal fees and restricting fund access.
This incident highlighted the urgent need for robust oversight and clearer regulatory frameworks to protect investors and maintain market confidence.
Frequently Asked Questions
What types of crypto assets can retail investors trade in Hong Kong?
Retail investors in Hong Kong are currently limited to trading only four specific cryptocurrencies approved by the SFC. This measure is designed to reduce risk while the regulatory framework is still developing.
How does the SFC evaluate crypto exchanges for licensing?
The SFC conducts thorough on-site inspections and compliance reviews. Exchanges must meet stringent operational, financial, and cybersecurity standards to be considered for a license.
What does "deemed-to-be-licensed" mean?
Firms under this status are allowed to operate while their license application is under review. However, the SFC advises the public to exercise caution when using these platforms.
Will Hong Kong allow more cryptocurrencies for retail trading in the future?
It is likely, as the SFC’s 2024–2026 roadmap includes plans to gradually expand the regulated crypto market. Any changes will aim to balance innovation with investor protection.
What should users look for in a licensed exchange?
Users should verify that an exchange is fully licensed by the SFC, offers secure asset custody, and complies with local anti-money laundering (AML) and counter-terrorism financing (CTF) requirements.
How can someone stay updated on new license approvals?
The SFC regularly updates its official website with announcements regarding new licenses and regulatory changes. Interested parties can also 👉 monitor official regulatory updates for the latest information.