Guidelines for cryptocurrency exchange licensing are expected to be published by the Hong Kong Securities Futures Commission (SFC) the following month.
On April 27, Bloomberg reported on the proposals, citing remarks made by Julia Leung, CEO of the SFC.
With the implementation of the new regulations, cryptocurrency trading platforms will be able to serve retail investors starting on June 1 and provide trading services.
Over 150 responses were sent during the licensing regime consultation process, stated Leung, according to Bloomberg.
In the Feb. 20 report, numerous conclusions were drawn, particularly concerning the importance of abiding by Anti-Money Laundering (AML) and Know Your Client (KYC) regulations. This was highlighted as a crucial component to be taken into account.
Some trading platforms have already started providing cryptocurrency-related services to investors under the SFC’s supervision, but confirmation is still pending for the majority of potential Virtual Asset Service Provider (VASP) licenses.
The SFC has only granted licenses to a select few trading platforms, including OSL and Hashkey Group.
Even if Hong Kong wants to be the next major crypto hub, not all trading platforms have opted to stay for the long run.
Bitget, a cryptocurrency exchange with $1.4 trillion in reserve assets, declared on April 24 that it will stop providing services to its Hong Kong clients once the Hong Kong VASP system officially came into force on June 1.
Several pilot projects, such as the tokenization of green bonds and the creation of Hong Kong’s own central bank digital currency (CBDC), are also being carried out by the regulator to evaluate the benefits of digital assets and their uses in the financial markets.
The connection between the business and mainland China, where cryptocurrency trading and Bitcoin mining were first outlawed in 2017, remains in doubt despite Hong Kong’s efforts to take a more lenient stance towards cryptocurrencies.