Hong Kong Hint Green Light For 11 New Crypto Exchanges, What’s Next?

Hong Kong’s securities regulator announced that 11 cryptocurrency exchanges are nearing the completion of their licensing process, following the implementation of a digital-asset rulebook aimed at establishing Hong Kong as a hub for the industry. Among these applicants are prominent platforms like Crypto.com and Bullish, which are now “deemed to be licensed,” as indicated on the Securities & Futures Commission’s (SFC) website.

This step marks a significant progression for these exchanges, positioning them to legally operate and market their services to local investors, pending full compliance with SFC regulations. In contrast, well-known exchanges such as OKX and Bybit withdrew their applications, while major players like Binance, Coinbase, and Kraken did not apply at all. By June 1, all operating crypto exchanges in Hong Kong must be at least deemed licensed.

Strategic Ambitions for Crypto Hub Status

Hong Kong’s pivot towards fostering a virtual-asset hub began in late 2022 as part of broader efforts to restore its standing as a financial center following a period of political unrest. The city’s crypto initiatives include expanding the number of licensed exchanges, introducing spot-Bitcoin and Ether exchange-traded funds (ETFs), and developing frameworks for stablecoins and digital bond issuance on tokenization platforms.

Hong Kong faces competition from Dubai and Singapore in its bid to become a leading digital-asset center. The city’s strict regulatory framework aims to bolster investor protection and prevent money laundering and terrorism financing, though it also imposes significant compliance costs. As of now, two exchanges, HashKey Exchange and OSL Group, have fully obtained licenses, and around two dozen companies have applied to operate crypto exchanges by the February 29 deadline.

Also Read: Cryptos To Buy On This 1st June To Stay Bullish Throughout Month

Challenges and Opportunities in Accessing Mainland Wealth

Traditionally, Hong Kong serves as a crucial gateway for accessing wealth from mainland China. However, Beijing’s ban on digital-asset trading limits mainland investors’ access to Hong Kong’s crypto exchanges and ETFs. Despite these restrictions, Chinese citizens reportedly continue to seek alternative investments through crypto, driven by falling home prices and overseas transfer limits. Bitcoin’s substantial rise in value since early 2023 has further fueled this demand.

The crypto exchange industry, however, has a history of operating in murky areas, highlighted by high-profile cases such as the collapse of FTX and the recent legal troubles of Binance, which faced a $4.3 billion penalty for violating US laws. In Hong Kong, the JPEX crypto exchange scandal last year underscored the challenges regulators face in overseeing the industry, especially as users can evade restrictions using virtual-private networks and peer-to-peer trading.

Also Read: Bitcoin Price Slips While Ethereum Jumps, Here’s Why Analyst Remains Bullish On ETH

The post Hong Kong Hint Green Light For 11 New Crypto Exchanges, What’s Next? appeared first on CoinGape.