Securities and Futures Commission of Hong Kong: Only Four "In Process" Exchanges, Establishing Complaint Channels in Response to JPEX Case

With the growing public concern over unregulated virtual asset trading platforms, the Securities and Futures Commission (SFC) of Hong Kong is taking multiple measures to enhance information dissemination and investor education, as well as strengthen regulation of this emerging market to safeguard investor interests and maintain market stability.

The SFC will also publish a list of "applicants for virtual asset trading platforms," reportedly only four in number, putting exchanges claiming to be applying for a Hong Kong license with more scrutiny.

Hong Kong to Implement Regulation in Compliance with the Law

The Securities and Futures Commission (SFC) stated that as early as 2017, it had introduced a comprehensive regulatory framework to oversee activities related to virtual assets, making it one of the first major financial regulatory institutions to do so. The institution will be granted full licensing and regulatory powers under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615), which will come into effect on June 1, 2023. This is to ensure that trading platforms implement strict control measures, including secure asset custody, prevention of market manipulation and abuse, and avoidance of conflicts of interest.

Enhancing Public Awareness, Publishing List of Operators

The SFC and the Investor Education Centre (IEC) will jointly launch a series of public awareness campaigns and strengthen investor education through various channels to raise public awareness of the risks associated with virtual assets and potential fraudulent activities. Additionally, the institution will publish multiple lists of virtual asset trading platforms to provide clear, transparent, and timely information, and consider providing more information on unregulated virtual asset trading platforms. These lists include:

a "Licensed Virtual Asset Trading Platform List"

b "Closed Virtual Asset Trading Platform List," which lists the names of virtual asset trading platforms that are required to close within a specified period under the law

c "Virtual Asset Trading Platforms Identified as Licensed," listing the names of virtual asset trading platforms identified as licensed by June 1, 2024

d "Virtual Asset Trading Platform Applicants List"

Rumors of Multiple Exchanges Applying, Await SFC Announcement

After the opening of license applications in Hong Kong, several exchanges have claimed they are "applying for a license." The SFC has announced that only four are in the application process: HKbitEX, HKBGE, HKVAX, and Victory.

In retrospect, Justin Sun stated in an interview that he expects to obtain a Hong Kong license within 6 to 12 months. To his knowledge, five exchange operators, including Huobi, have expressed interest in applying for a license: OKX, Gate.io, Bybit, and Bitget.

News Recap: Justin Sun, Chief Consultant of Huobi, CoinDesk Interview: Expects to Obtain Hong Kong License in Six Months to a Year

Revisiting the JPEX Incident, Establishing a Special Complaint Channel

The JPEX incident highlighted the risks of trading on unregulated virtual asset trading platforms and the necessity of strengthening regulation to maintain market confidence. The SFC stated that it will discuss with the police the establishment of a dedicated channel to share information on suspicious activities and violations on virtual asset trading platforms and conduct a thorough investigation into the JPEX case.

Lastly, the SFC expressed its commitment to continue close cooperation with the Hong Kong SAR Government and other regulatory bodies to safeguard the interests of investors and market confidence while researching timely regulatory measures to promote the sustainable and responsible development of the Hong Kong Web3 ecosystem.

SFC's Special Complaint Channel

Taiwan Remains Inactive on JPEX? JPEX Invested Millions in Taiwan, Endorsers and Sponsored Media Profited