Hong Kong to release list of crypto license applicants after JPEX scandal.

Hong Kong to release list of crypto license applicants after JPEX scandal.

The Blockchain Industry: Regulator Reveals List of Cryptocurrency Trading Firms in Hong Kong

Source: Pixabay / Andy Leung

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has decided to publish a list of cryptocurrency trading firms that have applied for licenses to operate in the Chinese territory. This move comes in the wake of the JPEX scandal, in which a Hong Kong-based unlicensed crypto exchange allegedly defrauded customers and caused significant losses. By releasing this list, the SFC aims to address public demand and shed light on the state of compliance within the industry.

The JPEX scandal, which has caused an estimated loss of HK$1.43 billion (US$182 million) to over 1,600 investors, marks one of the largest fraud cases in Hong Kong’s history. The incident has not only harmed investors but also dealt a blow to the government’s ongoing efforts to establish itself as a global crypto hub. The SFC’s decision to release the list of applicants serves as a reminder that being an applicant does not guarantee full compliance with the regulatory framework.

As of August 2023, only two digital asset trading platforms have received licenses to operate from the SFC. OSL Digital Securities Limited and Hash Blockchain Limited have been approved to serve Hong Kong’s retail customers since the regulator introduced new crypto rules on June 1. However, four other companies – namely HKVAX, HKBitEx, Hong Kong BGE Limited, and Victory Securities – have applied for licenses, indicating their intent to operate within the regulatory framework.

The SFC’s emphasis on investor education is evident in its recent statement. The regulator highlights that SFC-licensed virtual asset trading platforms (VATPs) adhere to robust governance measures to safeguard the interests of investors. These measures include safe custody of assets and prevention of market manipulative activities, among others. To facilitate investor protection, the SFC has imposed stringent requirements for onboarding processes, token due diligence, admission criteria, and disclosures.

In an effort to help the public identify unregistered or unregulated crypto businesses, the SFC plans to compile a list of “suspicious VATPs” that may have violated the law. Cases involving these suspicious entities will be referred to the police when necessary. Additionally, the SFC intends to collaborate with the Investor and Financial Education Council (IFEC) to launch a public campaign aimed at raising awareness about scams and fraud in the cryptocurrency space. Through mass media, social media, and education talks, this campaign will enhance investor education and foster a better understanding of the risks associated with virtual assets and potential fraud.

In summary, the blockchain industry in Hong Kong is undergoing significant regulatory changes in response to recent fraud cases, such as the JPEX scandal. The SFC’s decision to publish the list of cryptocurrency trading firm applicants is a step towards ensuring transparency and compliance within the sector. By imposing stringent requirements on SFC-licensed virtual asset trading platforms and promoting investor education, the regulator aims to protect investors and raise awareness about the risks associated with virtual assets and potential fraudulent activities. It is evident that Hong Kong’s financial watchdog is committed to cultivating a secure and well-informed blockchain industry within its jurisdiction.