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Hong Kong’s SFC to Enforce Licensing Compliance for Crypto Firms

Hong Kong's SFC to Enforce Licensing Compliance for Crypto Firms

  • The SFC reminded cryptocurrency enterprises that they need to get a license before June.
  • The applicants that are considered to be licensed will be subject to a temporary framework.

Local virtual asset trading platforms (VATPs) that have not yet completed their regulatory applications after a June 1 licensing deadline will be subject to “on-site inspections” according to the Hong Kong Securities and Futures Commission (SFC).

On May 28, the SFC reminded cryptocurrency enterprises that they need to get a license before June. A license or a “deemed-to-be-license” from the SFC will be required of all local crypto trading platforms after the deadline.

Stringent Compliance Enforcement

The applicants that are considered to be licensed will be subject to a temporary framework that was created for crypto enterprises that were already active in the region prior to the licensing system being put in place. The SFC would allegedly be physically pursuing businesses after June 1 for running VATPs without licenses, which is a criminal crime in Hong Kong.

Moreover, the SFC said that they would be conducting on-site inspections to ensure that the VATP applicants who are considered to have been licensed are in conformity with their regulations. These inspections will take place in the following months.

The regulatory watchdog went on to say that it will be paying special attention to the ways in which the companies are implementing KYC procedures and protecting customer assets. As a condition of their licensing application, the firms were cautioned not to “actively market services or onboard new retail clients until formally licensed” and to block access to their services for residents of mainland China.

Out of the total of 18 applications that were due by the deadline, 11 crypto firms and exchanges—including OKX,Gate.io and Huobi’s local arm—withdrew their applications.

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