Hong Kong SFC Introduces Licensing System for Crypto Platforms

New Licensing System for VATPs

Hong Kong’s Securities and Futures Commission (SFC) has implemented a new licensing regime for virtual asset trading platforms (VATPs) under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. Effective immediately, this system mandates that VATPs operating in Hong Kong secure a license to continue their services.

Transitional Arrangements and Deadlines

Platforms active before June 1, 2023, benefit from transitional arrangements, allowing them to operate until May 31, 2024, without breaching licensing requirements. These platforms must submit their license applications by February 29, 2024, via SFC's WINGS application forum. However, platforms established post-June 1 are ineligible for these transitional benefits.

Consequences of Non-Compliance

Platforms opting not to apply for the license will face shutdowns and must cease marketing activities in Hong Kong. The SFC has specified that any applications submitted beyond the February 2024 deadline will face rejection, emphasizing the importance of timely compliance.

Compliance with Securities Laws

The circular clarifies that the transitional arrangements do not apply to compliance with the Securities and Futures Ordinance. VATPs wishing to offer trading in security tokens must obtain the relevant licensing under the SFO before commencing operations.

Regulatory Intentions

The SFC's initiative aims to regulate virtual asset trading, ensuring industry compliance with established laws. While the new regulations have garnered support, some stakeholders have sought additional clarifications. The SFC remains firm on its deadlines to maintain regulatory integrity and foster a compliant trading environment in Hong Kong.