A Hong Kong legislator shared his personal opinion on the Hong Kong VASP licence & noted that there are several issues associated with it which means it is not beneficial to crypto companies.
Hong Kong is a crypto-friendly jurisdiction. In the mid of 2023, the Hong Kong securities regulatory body introduced a crypto-dedicated regulatory framework to legalise crypto trading for retail investors and also invited top crypto companies to set up their crypto business in Hong Kong under clear rules & laws.
So far top crypto exchanges e.g. Bybit, Binance, OKX, Gate, & HTX, etc withdrew their pending crypto licence application from the Hong Kong securities regulatory body. At the time many speculations came to the public domain behind such decisions but no crypto firm talked about the main reason behind their departure from a crypto-friendly jurisdiction.
At present, only 2 Chinese crypto Companies are operating services with Hong Kong crypto licence, while 11 crypto firms are waiting for approval.
On such news, a Chinese crypto blogger Colin Wu reported that the Hong Kong SFC requires virtual asset trading platforms to promise they won’t serve mainland Chinese users from any region, whether it is Hong Kong or another country. This rule makes it hard for offshore exchanges to comply. Major crypto exchange OKX tried to form an industry alliance to oppose this rule but failed.
Some industry insiders say that the withdrawn entity can reapply for VASP licence with a new legal entity or framework in the future, but it can’t use a brand similar to offshore exchanges.
On Hong Kong’s crypto licence system, David Chiu, Member of the Legislative Council of Hong Kong, said that the Hong Kong cryptocurrency licensing framework has faced censure for undermining market confidence. Prominent exchanges like Binance and OKX struggle to secure licences, and even those enterprises that manage to obtain them encounter substantial challenges in achieving profitability.
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