Hong Kong has announced a temporary cessation of new cryptocurrency exchange licensing as a part of a crackdown on non-compliant trading platforms. The Securities and Futures Commission (SFC) will require all unlicensed exchanges to halt operations by the end of May 2024. The move signals heightened regulatory scrutiny within the city’s crypto marketplace.
Crypto Exchanges Face Compliance Ultimatum
The SFC is urging investors to transition to regulated exchanges, as the clampdown will affect platforms without a license or those that have not applied for one. Meanwhile, two exchanges, OSL Digital Securities and HashKey Exchange, have already received official approval to operate in the territory. In total, 22 applications were filed, with four under an earlier voluntary scheme.
Several applicants, including Huobi HK and Meex, either withdrew their applications or were rejected. The SFC plans to publish a list of platforms that will be legally mandated to cease operations, informing the public about potential risks associated with these entities.
Restrictions and Public Guidance Loom
During the phase-out period, the SFC will limit the functioning of non-compliant exchanges and stop all related marketing within Hong Kong. A list of exchanges likely to receive licenses by June 2024 will also be released, although this does not guarantee their approval.
Licensed platforms will be able to offer Bitcoin and Ethereum trading to individual investors, with other digital assets currently under review. Meanwhile, the local exchange BitForex has come under fire for disruptions in service and lack of communication, leaving users with difficulty accessing their accounts and viewing their assets.