Hong Kong regulator issues warning about unlicensed crypto platforms

Hong Kong’s Securities and Futures Commission issued a warning Monday about unlicensed crypto platforms “engaging in improper practices.” 

The warning addresses both investors as well as the unlicensed platforms themselves — some of whom, the SFC said, claim to have submitted an application to the regulator despite not actually complying with its rules. 

The SFC claims that “anticipating the transitional arrangements, some unlicensed [virtual asset trading platforms] set up new entities to provide virtual asset services in Hong Kong.“

Some of the VATPs claiming to have applied for licenses “may not be in compliance with the legal and regulatory requirements under the new regime,” the SFC continues. 

The SFC maintains a list of licensed crypto exchanges. Only two are listed currently: HashKey and OSL Exchange.

Read more: Why Hong Kong could be crypto’s next ‘center of gravity’

“Other unlicensed VATPs may have publicly announced an intention to apply for a license from the SFC,” but have not done so, the warning to investors continues.

Hong Kong regulators laid out a licensing program earlier this year and lifted the crypto retail trading ban back in May as it gears up to be more of a crypto hub.

However, neither existing nor new entities can “launch certain virtual assets for trading by retail clients” or offer services in digital asset derivatives. Deposits, savings or earnings “arrangements” are also banned under the current regulatory structure.

While it is a crime for a crypto platform to market itself as licensed when it’s not, the SFC further noted that any platforms caught claiming to be applying for a license or having received a license would be penalized if they were to ever pursue actual approval with the SFC.

In addition to releasing regulatory framework, Hong Kong has also been pushing for major banks to take on crypto exchanges as clients to encourage further innovation.

As the Hong Kong Monetary Authority said in an April letter: “Maintaining safe and efficient banking system[s] and promoting access to basic banking services for legitimate businesses are key priorities.”

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