- Hong Kong authorities have warned crypto exchanges to apply for a license by February 29 or face shutdown
- The Securities and Futures Commission (SFC) reiterated the requirement for exchanges to obtain a virtual asset trading platform (VATP) license
- This caution aligns with Hong Kong’s aspirations to become a cryptocurrency hub, implementing measures like tokenizing government bonds and tackling crypto scams
Hong Kong authorities have warned crypto exchanges that they will be shut down if they don’t at least apply for an operational license by February 29. The country’s Securities and Futures Commission (SFC) issued the stern warning this week to the city’s cryptocurrency exchanges, reinforcing its message that crypto exchanges must apply for a virtual asset trading platform (VATP) license by February 29. This warning arrives amidst Hong Kong’s ambitions to position itself as a cryptocurrency hub, with initiatives like tokenizing government bonds and combating crypto scams.
All Exchanges Must HAve VATP License
In a statement reminding crypto outlets of their responsibilities, Julia Leung, CEO of the SFC, emphasized the importance of protecting investors from harm through increased awareness of crypto and investment scams. If any exchange fails to apply for a VATP license by the end of February then they will be forcibly closed by June, with the regulator unwilling to allow the public to use unregistered exchanges..
Currently, 14 firms have applied for licensing under Hong Kong’s new crypto regulatory framework, although exchanges awaiting approval are permitted to operate during the decision process. The same process was implemented in Japan following the collapse of MtGox in 2014, although the plan was criticized when Coincheck was hacked for $530 million in 2018 while its application was being reviewed.
Thus far, only two exchanges, OSL and HashKey Exchange, have secured approval to serve retail investors.
Users Urged to Take Steps Now
The SFC also urged investors to verify if the platforms they engage with hold a VATP license, advising caution when dealing with unlicensed exchanges until the new measures come in. Users are encouraged to prepare for potential closures by either closing their accounts or transitioning to SFC-licensed platforms well before the deadlines.
While applications are under review, the SFC cautioned that approval is not guaranteed, emphasizing the importance of trading only on licensed platforms to ensure investor protection.
