Onsite inspections by Hong Kong SFC slated for crypto license applicants
The Hong Kong Securities and Futures Commission (SFC) plans to carry out inspections at the offices of cryptocurrency trading platforms that want to operate as licensed virtual asset trading platforms (VATPs) in the area. The commission issued a reminder on May 28 that the “non-contravention period” for VATPs in Hong Kong is ending on June 1. The SFC will conduct on-site inspections to ensure compliance with regulatory requirements, focusing on the safeguarding of client assets and know-your-client processes. Failure to comply with these measures will result in license denial and other regulatory actions. Currently, 18 entities are classified as “deemed-to-be-licensed” until the licensing process is completed. After June 1, unlicensed platforms offering services will be in breach of anti-money laundering and counter-terrorism laws. The SFC emphasized that deemed-to-be-licensed VATP applicants are not officially licensed and cannot market their services or onboard retail users. If the SFC rejects a VATP application, the platform must submit a plan for an orderly wind-down of its business, with a focus on protecting client interests. Presently, only two entities, OSL Digital Securities Limited and Hash Blockchain Limited, are listed as fully licensed VATPs. Some applicants have withdrawn their applications after failing to meet the requirements set by the Hong Kong authority. Gate.io, the Hong Kong arm of a crypto exchange, withdrew its application on May 22, while OKX halted its services in Hong Kong and withdrew its license application on May 24. These licensing requirements come as Hong Kong experiences an increase in cryptocurrency-related scams. In March, the SFC warned about platforms impersonating the region’s two licensed platforms, OSL Digital and Hash Blockchain Limited.
