Hong Kong’s crypto licensing scheme attracts less interest than Singapore with 24 applicants day after deadline

The SFC saw a jump in last-minute applications, but the number of applicants so far falls far short of the 70 that Singapore saw after a similar regulation

Crypto exchanges that have not submitted an application must leave by May 31, but some fear that high compliance costs will keep the industry away

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The day after Hong Kong’s licence application deadline for cryptocurrency exchanges, the number of applicants was a third of the interest that a similar scheme in Singapore saw a few years ago. Photo: Shutterstock

Published: 6:00pm, 1 Mar 2024Updated: 6:19pm, 2 Mar 2024

A last-minute race to get in applications for virtual asset trading platform (VATP) licences ahead of the February 29 deadline this week saw the number rise to 24 by Friday, according to the latest tally on the Securities and Futures Commission (SFC) website, attracting far less interest than a similar scheme in Singapore a few years ago.

At least five crypto firms submitted their applications in the last 10 days to meet the critical deadline that would determine whether they could continue to operate in the city. Cryptocurrency exchanges operating or marketing in Hong Kong that have not yet submitted an application must now leave the city by May 31.

All the major crypto exchanges with ties to mainland China or Hong Kong, which include some of the biggest names in the industry, have applied for a licence either themselves or through affiliates. HBGL Hong Kong, an affiliate of HTX, formerly Huobi Global, submitted an application twice for its Huobi HK platform since February 20, after withdrawing its first application for undisclosed reasons.

HKVAEX, an affiliate of Binance, the world’s largest crypto exchange, applied for a licence in April, while OKX, another large exchange founded in China, applied back in November. Most of the applicants are local exchanges, while OSL and HashKey are currently the only exchanges licensed to serve retail investors.

With the initial application window now closed, the number of applicants offers the first indication of the industry’s interest in Hong Kong’s bid to become a global crypto hub with a new regulatory scheme that some fear could be too stringent for the market to remain competitive in this space.

“I think the SFC is doing a very strong regulation,” said Tony Tong, co-founder and co-chairman of the Hong Kong Blockchain Association after he spoke on a panel at the Economist Impact’s “Technology for Change Asia” conference this week. “I think it’s very good that many companies are coming to apply for the licence, but whether you can profit from the licence is yet to be proven.”

Tong said he still believes Hong Kong is a competitive destination, as it allows crypto firms to tap into developer talent in mainland China. Still, comparisons to similar regulations in Singapore have been rife, as the two markets are seen as competing for much of the same business.

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