Hong Kong’s Crypto License Scheme receives significantly fewer applications than Singapore’s 70
The application deadline for crypto licenses for virtual asset trading platforms (VATPs) in Hong Kong has passed, and there were 24 submissions, which is far fewer than the 70 submissions in a comparable scheme in Singapore.
The South China Morning Post reported that in the final days preceding the February 29 deadline, a minimum of five cryptocurrency firms submitted their applications.
Exchanges of cryptocurrencies that have not yet submitted an application must vacate the Hong Kong market by May 31.
By June 1, 2024, the Securities and Futures Commission (SFC) must publicly announce applications’ approval or rejection on a register.
Trading platforms for virtual assets may begin advertising in Hong Kong and accepting new retail and institutional crypto investors once they get clearance.
Industry heavyweights and major cryptocurrency exchanges with connections to Hong Kong or mainland China have submitted licensing applications either alone or via their affiliates.
While Binance’s HKVAEX filed in April, HTX (previously Huobi Global) subsidiary HBGL Hong Kong applied twice for its Huobi HK platform.
In November, OKX—another well-known Chinese exchange—submitted its application. Only OSL and HashKey, two regulated exchanges, cater to retail investors at this time.
In addition to the cryptocurrency exchanges that are now under review, the SFC has also published a list of those whose applications have been either withdrawn or refused.
Among the companies on the list are HBGL HK Limited, BitHarbour HK Limited, Ammbr HK Limited, and Meex Digital Securities Limited. The SFC only rejected one application out of the four exchanges—Mex Digital Securities Limited.
Three of the other candidates withdrew their interest. Many are worried that the market’s competitiveness will suffer as a result of the high requirements for registration.
Compared to Singapore, the licensing procedure in Hong Kong is expensive, but it does enable crypto businesses to access developer talent in mainland China.
The whole cost, including external assessors and the local responsible officer (RO), might exceed HK$60 million (US$7.7 million), according to estimates.
According to Angela Ang, a former regulator of the Monetary Authority of Singapore who spoke with SCMP, the strict standards in Hong Kong are to blame for the poor application pool.
There is also concern that crypto enterprises based in Hong Kong may be less competitive on a global scale due to the city’s rules.
The existing structure limits the range of services and activities that may be provided to clients, which might make it harder for them to expand internationally.
As part of its larger Web3 initiative, Hong Kong is also considering the possibility of a digital Hong Kong dollar and plans to regulate tokenized assets and stablecoins.
When the Monetary Authority of Singapore granted cryptocurrency firms a month to inform them of their current status and their plan to apply for a license in 2021, the outcome was 70 formal license applications by year’s end—three times as many as in Hong Kong.
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