Hong Kong to Expand Crypto Exchange Licenses by Year-End
Hong Kong’s Securities and Futures Commission (SFC) has announced plans to approve additional licenses for cryptocurrency exchanges by the end of 2024, reinforcing the city’s ambition to become Asia’s leading hub for digital assets.
This decision comes after a five-month review period during which only three exchanges were granted full licenses and received provisional licenses, raising initial concerns about the pace of regulatory approvals.
During the recent Fintech Week event, SFC Executive Director Eric Yip revealed that a finalized list of licensed exchanges is expected to be published by year-end. This initiative is part of Hong Kong’s broader strategy to cultivate a *crypto-friendly environment* and enhance its status as a global financial center.
To obtain a crypto exchange license in Hong Kong, applicants must adhere to several stringent criteria set forth by the Securities and Futures Commission (SFC):
The applicant must be a limited liability company registered in Hong Kong. A minimum paid-up share capital of 5,000,000 HKD (approximately 650,000 USD) must be maintained at all times. The company must have a physical office in Hong Kong, including a registered address and appropriate office space. At least two individuals must be appointed as responsible officers, one of whom must be a full-time resident of Hong Kong. These officers should possess the necessary qualifications and experience to manage virtual asset services.
All individuals associated with the company, including directors and responsible officers, must pass a comprehensive “fit and proper” assessment. This evaluation considers their financial health, criminal record, professional background, and overall integrity. The applicant must develop and implement robust policies addressing various risks, including anti-money laundering (AML) and counter-terrorist financing (CFT) measures, cybersecurity protocols, and operational continuity plans.
A detailed business plan is required, which should include a financial projection for the next 3 to 5 years. All applications must be submitted through the SFC’s WINGS platform, accompanied by necessary documentation that outlines the company’s structure, ownership details, and operational plans.
Yip noted that most applicants have positively responded to the SFC’s feedback, with many focusing on improving operational transparency and investor protections. Once exchanges fulfill the SFC’s regulatory standards, they will be issued licenses with certain restrictions until a third-party review confirms their full compliance. This process aims to ensure that these platforms adhere to high regulatory standards and address any operational weaknesses identified during the review.
In addition to expanding licensing, the SFC plans to establish a consultative panel in early 2025, which will include representatives from authorized exchanges and SFC officials. This panel aims to facilitate ongoing dialogue and regulatory collaboration within the industry.
Furthermore, Hong Kong is working on developing a framework for over-the-counter (OTC) crypto trading platforms and custodians. The goal is to create a *safer, more regulated environment* for both institutional and retail investors. Yip emphasized that structured regulations are crucial for maintaining Hong Kong’s competitiveness as more digital asset businesses seek clarity and security in the region.
As Hong Kong moves forward with these initiatives, it signals a commitment to fostering innovation in the financial sector while ensuring robust regulatory oversight in the rapidly evolving cryptocurrency landscape.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
