In its latest China financial stability report, the People’s Bank of China highlighted the strides Hong Kong has made in implementing crypto licensing despite widespread regulatory changes both internationally and in mainland China.
Now, Hong Kong remains one of the more crypto-friendly cities, even as 51 nations have already banned cryptocurrencies.
Hong Kong strengthens crypto regulations despite restrictions
According to the People’s Bank of China, Hong Kong has made significant advancements in its regulation and licensing procedures. This progress comes despite mainland China’s continued restrictions on crypto trading and recent regulatory changes to the international framework for crypto assets introduced by the Financial Stability Board.
In its annual China Financial Stability Report, the bank highlighted Hong Kong’s Securities and Futures Commission (SFC) role in regulating and licensing. According to the bank’s report, the commission has virtual assets under two categories for supervision, securitized financial assets and non-securitized financial assets, while it enforces a unique “dual license” system for digital asset exchanges.
Major financial institutions, including HSBC and Standard Chartered Bank, are also mandated to incorporate virtual asset platforms into their routine customer monitoring processes, and crypto asset businesses must seek licenses from the commission.
So far, the Securities and Futures Commission has licensed four new crypto exchanges in December: Accumulus GBA Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset EX, and Thousand Whales Technology (BVI).
Eric Yip, the SFC’s executive director of intermediaries, even commented:
We have been proactively engaging with VATPs’ senior management and ultimate controllers, which helps drive home our expected regulatory standards and expedite our licensing process for VATPs. We aim to strike a balance between safeguarding the interests of investors and facilitating continuous development for the virtual asset ecosystem in Hong Kong.
– Eric Yip
Some Hong Kong’s crypto institutions disapprove of the regulatory requirements
The Financial Stability Board established an International Regulatory Framework for Crypto Assets, outlining high-level guidelines for crypto asset oversight.
Hong Kong has been striving to follow the framework; however, some crypto institutions are pushing back against its SFC’s regulatory requirements. The four licenses granted this December were just among nearly 30 applications this year.
Of the nearly 30 companies that sought licenses, only around a dozen are still waiting for their licenses from the commission, as several major platforms, including OKX and HTX, withdrew their applications due to strict regulatory requirements.
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