Hong Kong SFC to conduct compliance checks at the offices of cryptocurrency firms following the expiration of the licensing deadline.

The Hong Kong Securities and Futures Commission (SFC) has announced that it will be conducting on-site inspections of local virtual asset trading platforms (VATPs) that have not yet completed their regulatory applications by the June 1 deadline. The SFC reminded crypto companies on May 28 about the importance of obtaining a license before the deadline. After June 1, all local crypto trading platforms must either be licensed or considered “deemed-to-be-licensed” by the SFC. Those deemed-to-be-licensed will operate under a temporary framework designed for crypto firms that were already operating in the region prior to the licensing regime. The SFC stated that it will be focusing on ensuring compliance with its regulatory requirements, with a particular emphasis on the safeguarding of client assets and Know Your Customer (KYC) processes. The SFC advised investors to only trade crypto on SFC-licensed platforms and cautioned companies seeking licenses against actively marketing their services or accepting new retail clients until they are formally licensed. Additionally, they were instructed to prevent mainland Chinese residents from accessing their services. In recent weeks, the number of crypto exchanges seeking operational licenses in Hong Kong has declined, with 11 companies withdrawing their applications and 18 applications still pending approval. Gate.HK, a crypto exchange, halted all activities related to acquiring new users and marketing, restricted existing users from making deposits, and began delisting tokens on May 23. The company plans to relaunch its services once it reconstructs its platform to comply with Hong Kong’s regulatory requirements. Currently, only two companies, OSL Digital Securities Limited and Hash Blockchain Limited, have been granted a license to operate in Hong Kong, according to the SFC.