The deadline for virtual asset trading platform (VATP) cryptocurrency license applications in Hong Kong has passed, with only 24 applicants, significantly fewer than the 70 applicants seen in a similar scheme in Singapore.
According to a report from the South China Morning Post, at least five cryptocurrency firms submitted their applications in the final days leading up to the February 29 deadline.
Cryptocurrency exchanges that have not applied must exit the Hong Kong market by May 31.
The Securities and Futures Commission (SFC) will announce approved and declined applications on a public register by June 1, 2024.
Upon approval, virtual asset trading platforms can onboard new retail and institutional crypto investors and commence marketing activities in Hong Kong.
Major crypto exchanges with ties to mainland China or Hong Kong have either applied for licenses directly or through their affiliates. Notably, HBGL Hong Kong (an affiliate of HTX), HKVAEX (an affiliate of Binance), and OKX have submitted applications.
Currently, OSL and HashKey are the only licensed exchanges serving retail investors.
Apart from the list of crypto exchanges being considered for approval, the SFC has also released a list of those whose applications have either been withdrawn or outrightly rejected by the agency.
There have been concerns about the strict requirements for the registration process in Hong Kong, potentially impacting the market’s competitiveness.
While Hong Kong allows crypto firms to access developer talent in mainland China, the high costs associated with the licensing process differentiate it from Singapore.
Estimates suggest that the entire process, including external assessors and hiring a local responsible officer (RO), could cost over HK$60 million (US$7.7 million).
Angela Ang, a former regulator with the Monetary Authority of Singapore, attributes the lower number of applicants in Hong Kong to the stringent requirements.
There is concern that Hong Kong’s regulations may limit the global competitiveness of crypto companies using the city as a base of operations, as the current framework restricts the scope of activities and services offered to customers.
Hong Kong also aims to regulate tokenized securities and stablecoins as part of its broader Web3 push, while exploring the concept of a digital Hong Kong dollar.
In comparison, Singapore’s Monetary Authority had a more streamlined process, resulting in about 70 official license applications by the end of 2021, three times the number in Hong Kong.