Hong Kong Securities and Futures Commission (SFC) Approves Four Virtual Asset Trading Platforms (VATPs)
The Hong Kong Securities and Futures Commission (SFC) has taken a significant step in regulating the virtual asset trading market by approving four new Virtual Asset Trading Platforms (VATPs). This move brings the total number of approved VATPs to eight, with more expected to be granted licenses in the future.
A Rigorous Licensing Process
The newly approved VATPs are Accumulus GBA Technology (Hongkong), DFX Labs, Hong Kong Digital Asset EX, and Thousand Whales Technology (BVI). These firms joined an existing group of licensed exchanges, including HashKey, OSL, and HKVAX. The SFC’s announcement highlights the agency’s swift licensing procedure for deemed-to-be-licensed VATP applicants.
To become licensed, these platforms underwent a thorough process that included on-site inspections and feedback from the SFC. The inspections focused on ensuring the protection of client assets, Know Your Customer (KYC) processes, and cybersecurity measures. According to Eric Yip, SFC executive director of intermediaries:
"We have been proactively engaging with VATPs’ senior management and ultimate controllers which helps drive home our expected regulatory standards and expedite our licensing process for VATPs."
The agency aims to strike a balance between safeguarding investor interests and facilitating the growth of the virtual asset ecosystem. Yip added that the SFC seeks to:
"…strike a balance between safeguarding the interests of investors and facilitating continuous development for the virtual asset ecosystem…"
Operating Restrictions
The newly approved exchanges will operate within a restricted scope, with specific requirements in place to ensure their security. These platforms must perform vulnerability assessments and penetration tests through an independent third party, achieving satisfactory results before operating restrictions are lifted. The SFC will supervise this process to ensure compliance.
To support the regulated environment, the SFC released a circular on December 18, outlining its expectations for VATPs. This move demonstrates the agency’s commitment to establishing clear guidelines for virtual asset trading platforms in Hong Kong.
VATP Licensing Process
The licensing process for VATPs involves several stages:
- Application: Virtual asset trading platforms submit an application to the SFC.
- On-site inspections: The SFC conducts on-site inspections to assess the platform’s compliance with regulatory requirements.
- Feedback and response: The SFC provides feedback to the platform, which must respond to address any concerns or issues raised.
The SFC’s roadmap for 2026 includes granting new licenses in batches to advance regulation, promote real-world asset tokenization, and explore blockchain technology. This strategic approach is designed to drive innovation while ensuring investor protection.
Remaining Applicant List
Eleven VATPs remain on the applicant list, with seven classified as ‘deemed to be licensed.’ These exchanges have conformed to Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). The SFC webpage features a popup window listing these platforms, warning users to trade only on licensed platforms.
Hong Kong’s Virtual Asset Market
Only four cryptocurrencies are currently available for purchase in Hong Kong: Bitcoin (BTC), Ether (ETH), Avalanche (AVAX), and Chainlink (LINK). Retail cryptocurrency trading was legalized in Hong Kong in August 2023. This development is expected to drive growth in the virtual asset market.
Conclusion
The SFC’s approval of four new VATPs marks a significant step forward in regulating the virtual asset market in Hong Kong. With more exchanges likely to be granted licenses, this move is expected to boost investor confidence and drive innovation in the sector. The agency’s commitment to establishing clear guidelines and regulations will continue to shape the development of the virtual asset ecosystem.
Related Articles
- Hong Kong makes HKVAX third licensed retail crypto exchange: This article highlights the growing trend of licensed exchanges in Hong Kong.
- More exchanges likely to be approved: As the SFC continues to grant licenses, it is expected that more exchanges will join the regulated market.
