Hong Kong Set to Approve More Crypto Exchange Licenses by Year-End: SFC

The Hong Kong Securities and Futures Commission (SFC) is preparing to greenlight additional cryptocurrency exchanges by the end of the year, according to SFC CEO Julia Leung. In an interview with local outlet HK01 on October 6, Leung revealed that 11 exchanges that applied for licenses have already undergone on-site reviews, with more approvals expected soon.

This follows the recent regulatory approval granted to HKVAX, making it the third exchange in Hong Kong to receive a license. The platform aims to launch its services in Q4 2024. HashKey and OSL, two other exchanges in the city, also hold operational licenses that were upgraded from the previous regulatory framework.

Among the current applicants is Bullish, the parent company of CoinDesk. However, the SFC has not disclosed the total number of applications, with one section of its website listing 11 applicants and another showing 16.

Hong Kong’s goal of becoming a leading hub for cryptocurrency and Web3 has faced criticism for its strict regulatory regime. Some industry players have expressed concerns that overly rigid requirements could deter global players from entering the market. A report in August indicated that some exchanges were found to have "unsatisfactory practices," including over-reliance on a few executives to manage client asset custody and insufficient safeguards against cybercrime.

Several major crypto firms, such as OKX and Bybit, withdrew their license applications in May without providing specific reasons. One key factor may have been the SFC’s directive requiring exchanges to prevent access by mainland Chinese residents. Despite this, Crypto.com remains on the list of applicants.

In response to these challenges, lawmaker Duncan Chiu argued in an opinion piece for the Hong Kong Economic Journal that the stringent conditions, borrowed from traditional finance, were not appropriate for the Web3 space. He also noted that the remaining applicants tend to be smaller-scale exchanges.

As the year draws to a close, the SFC’s anticipated approvals could signal a turning point for the city’s crypto landscape.