Web3 firms spending $25M for crypto license in Hong Kong.
Hong Kong regulators are making efforts to attract cryptocurrency firms from around the world in order to establish themselves as the leading crypto hub in Asia. According to a new report from Foresight News, Hong Kong-based Web3 firms are spending up to $25 million to obtain a Virtual Asset Service Provider (VASP) license.
Starting from June 1st, Hong Kong introduced new licensing requirements for crypto firms. To obtain regulatory approval, these firms need to provide accurate information about user statistics and company finances to the Securities and Futures Commission of Hong Kong. Failure to comply with these requirements will result in exchanges being forced to cease operations in the region by the middle of next year.
Foresight analysts revealed that Hong Kong branches of exchanges like OKX, BitgetX, HashKey Pro, OSL, and Gate.io have already begun operating. As of June 27th, OKX has acquired 8,800 registered users in Hong Kong and has facilitated a total trading volume of $150 million in the region. Sources familiar with the matter shared this information with Foresight News:
“Since traditional financial institutions lack prior infrastructure and have had to start from scratch in various aspects such as products and teams, the cost associated with VASPs has been very high. However, even for an experienced cryptocurrency institution, obtaining a license is not inexpensive.”
Recent Developments in Hong Kong’s Crypto Landscape
Amid these recent developments, Hong Kong regulators have been working with banks to encourage them to serve cryptocurrency clients. Earlier this month, reports indicated that Hong Kong regulators compelled banking giants like HSBC and Standard Chartered to provide services to cryptocurrency clients.
Just this week, HSBC announced that it will allow its customers to trade Bitcoin and Ethereum ETFs listed on the Hong Kong stock exchange. Currently, the Hong Kong Exchanges and Clearing Limited (HKEX) offers three cryptocurrency exchange-traded funds (ETFs) for trading. These include the CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF.
The inclusion of crypto ETFs on the Hong Kong exchange provides several benefits for investors. Firstly, these listings offer a regulated environment that prioritizes investor protection, which enhances the credibility of the crypto market. Additionally, ETFs present a convenient and accessible investment option as they can be bought and sold on the exchange, similar to traditional stocks, providing liquidity and ease of use for investors.
On the same day, the Hong Kong Virtual Asset Consortium released a virtual asset index that includes popular cryptocurrencies like Bitcoin and Ether, as well as other altcoins and privacy tokens. This newly established organization aims to provide ratings services and indexes to facilitate retail crypto trading in the Special Administrative Region (SAR) of Hong Kong. It has gained support from companies such as Huobi, KuCoin, Bitget, and others.