The Securities and Futures Commission of Hong Kong (SFC) has raised alarms over seven cryptocurrency trading platforms operating without the required licenses. This move is part of a broader effort to curb the risks associated with scams and fraudulent activities in the crypto space.
On July 5, the SFC updated its Alert List, adding Taurusemex, Yomaex, Bitones.org, BTEPRO, CEG, XTCQT, and Bstorest. These platforms are accused of falsely claiming registration with the SFC and employing extortion tactics, such as blocking withdrawals and demanding fees to resume operations.
Since January 2020, the SFC’s Alert List has included entries for unregistered and illegal crypto trading entities. As of 2024, the list has 39 entries, with 28 additions this year alone. The SFC had mandated all crypto exchanges to apply for an operational license by May 31, 2024.
Several affiliates of major mainland China-linked crypto exchanges, including OKX, Gate.io, KuCoin, Binance, and HTX (formerly Huobi), have also withdrawn their VATP license applications in Hong Kong. Firms with an existing presence were granted a one-year grace period, but those that withdrew must now shut down their Hong Kong operations.
Seven of the original 24 applicants withdrew their application, citing regulatory pressure. One of the SFC’s requirements that has triggered the mass withdrawal is the regulatory body’s mandate that prevents mainland Chinese residents from accessing VATPs in HongKong
Those failing to comply were required to shut down. Despite over 22 exchanges applying for licenses, many withdrew their applications before the deadline, including OKX and Huobi Hong Kong.
Ever since the FTX collapse in 2022, Hong Kong is working on strengthening its regulatory oversight of centralized exchanges. In December 2022, the legislative council incorporated virtual asset service providers into the same legal framework as traditional financial institutions. This was followed by the SFC introducing a new regulatory framework for cryptocurrencies on June 1, 2023.
Under these new regulations, digital asset exchanges seeking to operate in Hong Kong must adhere to strict Anti-Money Laundering guidelines and investor protection laws. The rules also expand access to virtual asset trading beyond professional investors to include retail investors. Additionally, Hong Kong has been pushing major banks like HSBC, Standard Chartered, and Bank of China to engage with crypto clients.
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