| Hong Kong has accepted
its long-awaited licensing regime for crypto exchanges as part of its
plans to turn the region into a crypto hub, allowing retail investors to
trade major tokens, including Bitcoin (BTC) and Ether (ETH), on
licensed platforms. The region's Securities and Futures Commission
(SFC) will open applications for digital asset trading platform licenses
on June 1. - The
regulator said stablecoins should not be admitted for retail trading
until Hong Kong's planned extensive regulatory framework for stablecoins
comes into effect, which is expected to happen by 2024.
- The
guidelines also explicitly prohibit offering crypto gifts, including
airdrops, for crypto exchanges to incentivize retail customers to
invest.
- The new regime will hold the platform operators responsible for conducting due diligence.
- Under the new rules, the crypto exchanges will have to always maintain 5M Hong Kong dollars (~$640,000) of capital at minimum.
- The
regime will also require digital asset trading platforms to submit
their liquid capital, a summary of bank loans, advances, credit
facilities, and a profit and loss analysis to the SFC at the end of each
month.
- The platforms will hold their own assets separate from the client assets.
- All
tokens listed on the exchanges will need to go through due diligence
checks, have a 12-month track record, and pass smart contract audits.
- The guidelines also clarify the requirements for anti-money laundering, cybersecurity standards, and customer protection, along with the fines paid to the platform violating these measures.
- There are currently only two licensed crypto exchanges in Hong Kong: HashKey and OSL.
- The SFC has yet to approve any digital asset trading platform to cater to retail investors.
- However,
many crypto exchanges, including OKX and Bitget, recently revealed
their plans to apply for a license under Hong Kong's new licensing
regime.
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