Hong Kong Securities and Futures Fee (SFC) is about to examine the places of work of cryptocurrency buying and selling platforms searching for to function within the space as licensed digital asset buying and selling platforms (VATPs).
In a May 28 announcement, the fee reminded that the “non-contravention interval” for VATPs working in Hong Kong is coming to an finish on June 1.
In accordance with the regulator, these platforms which might be “deemed-to-be-licensed” must endure an onsite inspection.
“The SFC will conduct on-site inspections to establish their compliance with the SFC’s regulatory necessities, with a selected give attention to their safeguarding of consumer property and know-your-client processes,” the announcement mentioned.
Any of the candidates present in violation of the required compliance measures would see their licenses denied. They might even be topic to different regulatory actions as deemed mandatory by the SFC.
Thus far, 18 entities are at the moment labeled as “deemed-to-be-licensed,” a short lived measure put in place till the licensing course of is accomplished. After the June 1 deadline, any unlicensed platform providing their providers can be straight breaching the anti-money laundering and counter-terrorism legal guidelines.
Additional, the SFC has burdened that deemed-to-be-licensed VATP candidates should not formally licensed and, therefore, can not interact in advertising and marketing their providers or onboarding retail customers.
Furthermore, if the SFC rejects the applying of a VATP, it must “submit a plan” for the orderly winding down of its enterprise in Hong Kong, with a give attention to defending consumer pursuits.
On the time of publication, only two entities, particularly OSL Digital Securities Restricted and Hash Blockchain Restricted, are listed as totally licensed VATPs.
Some candidates have already withdrawn their functions after failing to satisfy the Hong Kong authority’s necessities. The newest on this regard was the Hong Kong arm of crypto alternate Gate.io, which withdrew its application on Could 22.
Crypto alternate OKX additionally took a similar route and halted its providers in Hong Kong after saying its license utility withdrawal on Could 24.
The licensing necessities come as Hong Kong is witnessing an uptick in cryptocurrency-related scams. In March, the SFC warned of platforms impersonating the region’s two licensed platforms, OSL Digitial and Hash Blockchain Restricted.