Hong Kong's securities regulator, the Securities and Futures Commission (SFC), announced that 11 cryptocurrency exchanges are on the verge of obtaining a license.
This development comes a year after the introduction of a digital asset management guideline aimed at establishing Hong Kong as a hub for the crypto industry.
According to SFC's website, Crypto.com and Bullish “are considered licensed” among the applicants. These platforms are among those with significant global trading volumes. However, leading digital asset organizations such as OKX and Bybit, known for their significant activities, withdrew their permit applications. Remarkably, Binance, the world's largest exchange, nor Coinbase, one of the largest US platforms, nor Kraken have applied.
The SFC has given until June 1 for crypto exchanges to be licensed or recognized as such. To operate in the city and provide services to local investors, companies must fall into at least the second category. Once the SFC is satisfied with their consistent compliance, they will receive the actual permits.
In late 2022, authorities shifted their focus to creating a virtual asset center. The move was part of an effort to restore Hong Kong's reputation as a financial center following a crackdown on dissent that negatively affected global companies and foreign staff.
Crypto initiatives include expanding the list of permitted exchanges, launching spot Bitcoin and Ethereum ETFs, planning a framework for stablecoins, and issuing digital bonds on tokenization platforms.
In traditional markets, Hong Kong acts as a gateway to access wealth from mainland China. But Beijing's ban on digital asset trading means mainland investors have limited access to Hong Kong's crypto exchanges and ETFs.
Despite the ban, Chinese citizens are suspected of seeking alternative investments or exceeding overseas transfer limits amid falling housing prices. Bitcoin's quadrupling since the beginning of 2023 has fueled demand.
Traditional Chinese crypto startup Bixin, Matrixport, founded by Bitmain Co-Founder Jihan Wu, and Bullish, founded by EOS development company Blockone and acquired by CoinDesk, are also among the approved group.
*This is not investment advice.