- SFC inspections reveal compliance gaps, threatening ambitions of Hong Kong's crypto hub.
- Main exchanges are dealing with delays and licenses are in danger as a consequence of unmet regulatory requirements.
- The JPEX incident heightens the SFC's give attention to consumer asset safety and strict KYC enforcement.
Hong Kong's crypto hub ambitions have hit a snag as exchanges grapple with the Securities and Futures Fee's (SFC) strict licensing necessities.
On-the-spot inspections by the SFC have revealed deficiencies within the operation of some crypto platforms, elevating considerations in regards to the metropolis's potential to determine itself as a number one hub for digital belongings.
Since June, when a number of crypto platforms have been granted deemed-licensed standing, the SFC has been conducting inspections to make sure compliance with its rules.
Sources counsel that some platforms failed to satisfy the SFC's requirements in key areas resembling defending consumer belongings and stopping cybercrime.
Reliance on a small group of executives to handle these core capabilities was recognized as a major drawback. SFC opinions are ongoing and findings could evolve, which may result in additional issues for collaborating platforms.
As well as, the SFC has but to reveal which exchanges have did not adjust to its necessities, however the impression of those inspections is already being felt. Among the many 11 exchanges examined are family names resembling Crypto.com, Bullish and HKbitEX. These platforms have been banned from accepting new shoppers till they safe full licenses.
As well as, the SFC warned that platforms that don’t appropriate the recognized points could lose their deemed-licensed standing or have their license functions rejected. This might pressure them to start out the appliance course of once more, additional delaying their operations.
The latest scandal involving JPEX, an unlicensed crypto platform that allegedly defrauded traders of HK$1.6 billion ($205 million), has elevated the urgency of those checks.
The SFC stated full licences, anticipated by the tip of 2024, will solely be issued to candidates who totally adjust to all rules, significantly these geared toward defending consumer belongings and guaranteeing strict 'know your consumer' procedures.
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