Hong Kong regulator extends swift licensing process to new applicants
Having introduced its swift licensing process late last year, Hong Kong's Securities and Futures Commission (SFC) has extended access to the process to all new virtual asset trading platform (VATP) applicants.
In a statement published on its website on Jan. 16, the regulator outlined that it is extending the swift licensing process to new applicants. Back in December, the SFC approved licensing relative to four exchanges under the expedited process. Those additions included Accumulus GBA Technology Co., DFX Labs Company, Hong Kong Digital Asset EX and Thousand Whales Technology (BVI).
Seven licensed VATPs
That has brought the total number of licensed exchanges to seven, as HashKey, OSL and HKVAX were the first exchanges to be approved. In November, fifteen licensing applications relative to virtual asset platforms, had been pending. According to SFC CEO Julia Leung, the regulator had hoped to issue licenses to eleven VATPs by the end of 2024.
The new expedited process requires applicants to “implement their policies, procedures, systems and controls before conducting an external assessment on these measures.” The regulator decided to extend the swift licensing process due to the effectiveness of the SFC’s engagement with other applicants, relative to the regulatory standards being put in place, implemented through on-site inspections being carried out.
Fostering a healthy ecosystem
Commenting on the development, Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, stated:
“The SFC is committed to fostering a healthy ecosystem and a robust regulatory framework for the development of virtual assets in Hong Kong. With the new approach, we will enhance our collaboration with VATP applicants, providing them with constructive and timely feedback, thereby enabling fully compliant VATPs to bring their services to investors more swiftly.”
While the regulator is awarding licensing on an expedited basis through the swift licensing process, licensing is conditional. The VATP can operate on a restricted scope of business once it has completed rectification actions following feedback provided by SFC inspectors.
In October Yip outlined the SFC’s plans to create a consultative panel consisting of senior management executives from licensed VATPs. The objective of the panel is to gather feedback and concerns from licensees, adjusting the regulatory framework where deemed appropriate, relative to that feedback.
Commenting on the initial introduction of the expedited approval system last December, Yip stated:
“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. We aim to strike a balance between safeguarding the interests of investors and facilitating continuous development for the virtual asset ecosystem in Hong Kong.”
The Hong Kong government has also been working towards incorporating a stablecoin bill, which will establish a regulatory framework with regard to fiat-referenced stablecoins. The SFC also intends to introduce licensing for crypto custodians in 2025.
