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SFC reminds crypto investors to be wary of unlicensed platforms in final month to apply under Hong Kong scheme

  • The SFC issued a notice on Monday reminding investors that a number of new licence applicants are not yet approved and pose risks
  • Under new rules that took effect last year, crypto exchanges operating in the city must apply for a licence by February 29 or shut down by June 1

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Hong Kong wants crypto investors to remain wary as exchanges rush for licence. Photo: Bloomberg
Matt Haldane
With Hong Kong in the final month for cryptocurrency exchanges to apply for a licence from the Securities and Futures Commission (SFC), the regulator has reminded investors of the risks of trading on platforms that have not yet been approved.

“The SFC strongly urges investors to trade virtual assets ONLY on SFC-licensed VATPs [virtual asset trading platforms] because they may leave themselves unprotected by trading on unlicensed platforms,” the regulator said in a notice on Monday.

Four more crypto exchanges were added to the list of official VATP licence applicants last month, including the Binance-linked exchange HKVAEX and Singapore-based crypto derivatives platform Bybit. The SFC started publishing the list after a high-profile fraud involving the JPEX trading platform last fall that resulted in losses of HK$1.5 billion (US$192 million).

Under the city’s virtual asset regulation that went into effect last year as an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, companies selling or marketing cryptocurrencies to Hong Kong residents must apply for a licence by February 29 or cease business in the city by June 1.

The SFC also encouraged investors with accounts on unlicensed exchanges to prepare to pull money out of those platforms by May 31, possibly by moving their virtual assets to a licensed exchange.

To date, there are only two licensed exchanges in Hong Kong: OSL and HashKey. Both applied for an earlier voluntary licence under rules that have been supplanted by last year’s regulation. Last summer, both exchanges had their licences upgraded, allowing them to serve retail investors, a feature of the new scheme that had been barred under the previous licence.
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