Hong Kong's Virtual Asset Service Provider (VASP) licensing regime will officially take effect on June 1, 2023. In preparation, the Securities and Futures Commission (SFC) announced it will release licensing guidelines for virtual asset trading platforms next month.
Key Developments in Hong Kong’s Virtual Asset Regulation
According to Bloomberg, Julia Leung, CEO of the Hong Kong SFC, stated during a public event on April 26 that the regulator plans to issue licensing guidelines for virtual asset trading platforms in May 2023. The SFC received over 150 responses during its public consultation phase.
Key proposals from the consultation include:
- Allowing licensed platforms to serve retail investors
- Refining regulatory requirements for the VASP licensing framework
Current Licensed Operators & Applicants
Currently, only HashKey and OSL hold virtual asset licenses in Hong Kong. Major global exchanges like Huobi and OKX have expressed intent to apply for licenses and establish local offices.
Additionally, Singapore-based DBS Bank confirmed plans to seek a Hong Kong license to offer crypto services to clients.
Evolution of Hong Kong’s Virtual Asset Regulation
Phase 1: Voluntary Licensing (2018–2023)
- Introduced in 2018 as a voluntary opt-in system
- Restricted services to professional investors (minimum portfolio: HK$8 million)
- Effectively excluded retail participation
Phase 2: Mandatory Licensing (June 2023 Onward)
- Mandatory licensing for all platforms operating in Hong Kong or targeting local investors
- Covers both securities and non-securities token trading
- Retail investors permitted under new rules
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Compliance Deadlines & Transition Plans
Julia Leung emphasized that platforms must:
- Modify systems to meet new requirements
- Prepare compliance measures for licensing applications
- Exit the market orderly if not pursuing a license
FAQs
1. Who needs a VASP license in Hong Kong?
All virtual asset trading platforms serving Hong Kong investors—regardless of token type—must obtain an SFC license by June 1, 2023.
2. Can retail investors trade virtual assets legally?
Yes, the new regime allows licensed platforms to serve retail investors, a significant shift from prior restrictions.
3. Which exchanges are already licensed?
Only HashKey and OSL currently hold licenses. Others like OKX and Huobi are in the application process.
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4. What happens to unlicensed platforms after June 1?
They must cease operations or face regulatory action. The SFC advises a structured wind-down for non-applicants.
Conclusion
Hong Kong’s updated VASP licensing framework marks a pivotal step toward mainstream crypto adoption, balancing investor protection with market growth. Platforms and users alike should prepare for the June 1 transition.
For traders, partnering with licensed exchanges ensures compliance and security. Stay informed as the SFC releases detailed guidelines next month.