11 Crypto Platforms Under Review as Hong Kong Faces Criticism on Strict Regulations

The Hong Kong Securities and Futures Commission (SFC) plans to approve more cryptocurrency exchanges by the end of the year, according to CEO Julia Leung.

Speaking to local outlet HK01 on October 6, Leung noted that 11 platforms seeking licenses have undergone on-site reviews. She expects further progress in their applications before 2024 ends.

This follows the approval of the local exchange HKVAX, which aims to launch in Q4 2024. It is the third exchange to gain regulatory approval in Hong Kong. It joins HashKey and OSL, which upgraded their previous licenses. Bullish, the parent company of CoinDesk, has also applied for a license.

Hong Kong's Crypto Uncertainty Grows

The total number of applicants remains unclear. The SFC’s website lists either 11 or 16 platforms under the new licensing rule. The approval process has faced criticism for being too strict, which some argue could delay Hong Kong’s goal of becoming a crypto and web3 hub.

In August, reports highlighted “unsatisfactory practices” at some exchanges, such as limited executive oversight of client assets and weak cybercrime defenses. Despite an invitation for major players like Coinbase to set up in Hong Kong, companies such as OKX and Bybit withdrew their applications in May.

The South China Morning Post reported that this may have been due to SFC requirements preventing mainland Chinese residents from accessing their services.

📰 Julia Leung, the chief executive of the Hong Kong Securities and Futures Commission, shared with HK01 that the regulator hopes to make progress by the end of the year, including the issuance of licenses in groups. pic.twitter.com/EAw8tWmwmk

JPEX Collapse Prompts Regulatory Changes

The SFC has also been criticized for its handling of rogue exchanges. Last year, the collapse of JPEX led to over 2,600 Hong Kong residents losing around $200 million. This incident prompted the SFC to publish lists of licensed and suspicious platforms to increase transparency, as reported by Finance Magnates.

The commission is now exploring regulations for over-the-counter crypto trading and custody services, with industry input being sought.