Hong Kong Set to License More Crypto Exchanges, Strengthens AI Policy in Finance

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As an experienced crypto investor with roots deeply entrenched in the bustling financial hub of Asia, I find the recent developments in Hong Kong’s cryptocurrency landscape intriguing. The SFC’s commitment to licensing more exchanges by 2024 is a positive step towards fostering a more regulated and secure environment for retail trading.

By the end of 2024, Hong Kong’s Securities and Futures Commission (SFC) intends to grant licenses to additional cryptocurrency exchanges. This information was disclosed during this year’s Fintech Week in Hong Kong by Eric Yip, the SFC’s Executive Director for Intermediaries. He also offered insights into the current regulatory strategies being implemented in the city.

As reported by Yip, the commission has collaborated extensively with applicants, providing constructive criticism that encouraged numerous exchanges to allocate sufficient funds for meeting all necessary regulatory requirements.

Significantly, starting from June 2023, the city introduced its regulatory structure for digital assets, paving the way for retail cryptocurrency trading on authorized platforms. Yet, only HKVAX, HashKey, and OSL have secured full licenses at this point. A further 11 platforms are functioning under a temporary permit, waiting for final approval once they fulfill the Securities and Futures Commission’s (SFC) stipulated compliance conditions.

By the end of December, the regulatory body aims to wrap up the licensing procedure and publish the definitive list of all fully licensed exchanges.

SFC Tightens Oversight

The regulatory path for the crypto exchanges under examination hasn’t been smooth sailing. During reviews, the Securities and Futures Commission found numerous compliance issues on the “deemed-to-be-licensed” platforms. In October, the agency’s CEO, Julia Leung, pointed out that these examinations revealed places where companies didn’t meet compliance standards.

Once the required adjustments have been implemented, these companies can expect to receive their operational permits. Yet, it’s important to note that complete operational autonomy will not be granted until exchanges undergo a comprehensive evaluation by an external party, working together with the Securities and Futures Commission (SFC).

By 2025’s beginning, the Securities and Futures Commission (SFC) intends to set up an advisory group including their licensed exchanges. This move aims to create a cooperative regulatory atmosphere where both investor safety and market stability are emphasized.

In the course of this demanding licensing procedure, well-known exchanges such as OKX, Gate.io, and HTX have chosen to pull out their applications, citing issues with regulations. Yet, firms like Bullish and Crypto.com are still listed as applicants on the SFC’s website, suggesting continued enthusiasm for Hong Kong’s cryptocurrency market.

New Policies for AI in Finance

Besides broadening its cryptocurrency regulations, Hong Kong is also progressing with regulatory initiatives specifically for Artificial Intelligence (AI) within the finance sector. On Monday, government officials announced the city’s initial set of AI policy directives, designed to boost AI’s influence in financial markets and other crucial industries. These guidelines suggest that regulatory bodies should work together to create a cohesive system for implementing AI technology.

As an analyst, I’d like to highlight that Hong Kong has rolled out tax benefits specifically aimed at cryptocurrencies as part of their strategic plan to draw in global crypto expertise. Secretary for Financial Services and the Treasury, Christopher Hui Ching-yu, believes that our financial sector is ideally suited to foster AI growth given its substantial markets and abundant scenarios. He reinforces the government’s determination to pass relevant legislation before the end of this year.

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2024-10-28 13:24