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The Hong Kong SFC will conduct on-site inspections for crypto license applicants
The Hong Kong Securities and Futures Commission (SFC) is set to inspect the offices of cryptocurrency trading platforms seeking to operate in the area as authorized virtual asset trading platforms (VATPs).
In a Announcement dated May 28thThe commission reminded that the “non-infringement period” for VATP companies operating in Hong Kong will expire on June 1.
According to the regulator, platforms “deemed to be authorised” should undergo an on-site inspection.
“SFC will conduct on-site inspections to ensure their compliance with SFC regulatory requirements, with a focus on safeguarding customer assets and know-your-customer processes,” the announcement reads.
Any of the applicants found in violation of the required compliance measures would be denied their license. They would also be subject to other regulatory actions deemed necessary by the SFC.
So far, 18 entities are currently labeled as “deemed licensed,” a temporary measure put in place until the licensing process is complete. After the June 1 deadline, any unlicensed platform offering its services would be directly violating anti-money laundering and anti-terrorism laws.
Furthermore, the SFC emphasized that VATP applicants deemed to be licensed are not formally licensed and, therefore, cannot engage in the marketing of their services or onboarding retail users.
Furthermore, if the SFC rejected the application for a VATP, it would have to “present a plan” for the orderly liquidation of its assets in Hong Kong, with particular attention to protecting the interests of clients.
At the time of publication, only two entitiesnamely OSL Digital Securities Limited and Hash Blockchain Limited, are listed as fully licensed VAPs.
Some applicants have already withdrawn their applications because they did not meet the requirements of the Hong Kong authorities. The latest in this regard was the Hong Kong arm of the cryptocurrency exchange Gate.ioWhich withdrew his application on May 22nd.
Also OKX cryptocurrency exchange took a similar path and stopped its services in Hong Kong after announcing the withdrawal of its license application on May 24.
The licensing requirements come as Hong Kong is seeing a surge scams related to cryptocurrencies. In March the SFC had warned against the platforms impersonating the two authorized platforms in the regionOSL Digital and Hash Blockchain Limited.