- Hong Kong’s SFC has reiterated its stance on crypto regulation.
- The regulator issued further instructions to crypto trading platforms.
- The development comes as a key registration deadline looms.
Hong Kong’s Securities and Futures Commission (SFC) has warned crypto exchanges to prepare for further scrutiny after the “non-contravention period” lapses on June 1.
In a statement dated May 28, the SFC reminded virtual asset trading platforms (VATPs) that they must be either licensed or “deemed-to-be-licensed” applicants under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) to continue operating in Hong Kong after the deadline.
Inspection of “Deemed-to-be-Licensed” Applicants
According to the statement, the SFC requires deemed-to-be-licensed VATP applicants and their ultimate owners to fully comply with several pre-licensing conditions, including engaging external assessors to review the effectiveness of their policies, procedures, systems, and controls.
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In addition to refraining from actively marketing their services to onboard new retail clients, VATP applicants must also prevent Mainland Chinese residents from accessing their services and platforms or risk the “SFC’s swift refusal” of their applications.
The regulator further warned crypto trading platforms to prepare for physical inspections.
“In the coming months, whilst the deemed-to-be-licensed VATP applicants pursue their applications, the SFC will conduct on-site inspections to ascertain their compliance with the SFC’s regulatory requirements, with a particular focus on their safeguarding of client assets and know-your-client processes,” the statement read.
Per the statement, the inspection findings will assure the SFC of safeguarded investor interests, as well as “feed into the licensing process.”
“Again, in case of any non-compliance with key regulatory requirements for investor protection noted from the inspections, the SFC will swiftly refuse these licence applications and take other regulatory actions as appropriate,” the regulator cautioned.
The statement said that if an application for a deemed-to-be-licensed VATP is refused, the SFC will require the applicant to wind down its business in Hong Kong after addressing client interests.
Stay updated on why OKX withdrew its Hong Kong license application:
OKX Pulls HK License Application After ‘Careful Consideration’
Read about another crypto exchange that pulled its Hong Kong license application:
HTX’s Hong Kong Arm Pulls License Application for a Second Time
