The Securities and Futures Commission (SFC) of Hong Kong has announced that it will be conducting on-site inspections of local virtual asset trading platforms (VATPs) that have not yet completed their regulatory applications by the June 1 licensing deadline.
On May 28, the SFC reminded crypto companies of the requirement to obtain a license before June. After the deadline, all local crypto trading platforms must either be licensed or considered licensed by the SFC.
Applicants who are considered licensed will fall under a temporary framework designed for crypto firms that were already operating in the region before the licensing regime was implemented.
Operating an unlicensed VATP in Hong Kong after June 1 will be considered a criminal offense, and the SFC will actively pursue these companies.
“While the deemed-to-be-licensed VATP applicants continue their application process in the coming months, the SFC will conduct on-site inspections to ensure their compliance with our regulatory requirements,” stated the SFC.
The SFC also emphasized that it will pay special attention to how these firms are protecting client assets and implementing Know Your Customer (KYC) procedures.
The SFC advised investors to only trade cryptocurrencies on platforms that are licensed by the SFC.
Additionally, it warned companies seeking licenses not to promote their services or onboard new retail clients until they are formally licensed, and to prevent mainland Chinese residents from accessing their services.
Earlier this month, the number of crypto exchanges applying for operational licenses in Hong Kong steadily declined.
A total of 11 crypto companies and exchanges, including OKX and Huobi’s local branch, withdrew their applications prior to the deadline, while 18 applications are still awaiting approval.
Gate.HK, a crypto exchange, halted all activities related to acquiring new users and marketing, prohibited existing users from making deposits, and began delisting tokens on May 23.
The exchange plans to relaunch its services after restructuring its platform to comply with Hong Kong’s regulatory requirements.
According to the SFC, only two companies, OSL Digital Securities Limited and Hash Blockchain Limited, have been granted licenses to operate in Hong Kong.
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