Hong Kong SFC Grants New Digital Asset Exchange License to HKDAEx

August 31, 2024

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Hong Kong’s Securities and Futures Commission (SFC) has granted a digital asset exchange license to Hong Kong Digital Asset Xchange (HKDAEx), despite the formal application deadline having passed on May 31. The approval underscores Hong Kong’s ambitions to fortify its position as a leading global hub for digital assets.

HKDAEx, a subsidiary of the Hong Kong Financial Asset Exchange Group, submitted its license application on August 27. The company aims to bridge the gap between physical and digital assets, aiming to enhance the liquidity of tangible assets through digital tokenization.

A Cautious Move

While HKDAEx’s application has been acknowledged, the SFC retains the authority to return any application deemed incomplete or flawed by unresolved fundamental issues. This cautious yet progressive regulatory stance reflects Hong Kong’s commitment to maintaining a secure and transparent financial environment.

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David Chiu, a member of Hong Kong’s Legislative Council, recently reaffirmed the region’s commitment to refining its digital asset regulatory framework, with an anticipated completion date set for 2025-end. The aim is to position Hong Kong as a secure and attractive destination for digital asset investments and innovations.

Hong Kong’s Crypto Regulations

As of June 1, the regulatory landscape in Hong Kong has become stricter, making it a criminal offense to operate an unlicensed virtual asset trading platform (VATP). While some applicants, like HKDAEx, have received initial approvals, only a select few have obtained full operational licenses. Currently, only two platforms—OSL Digital Securities and Hash Blockchain—are fully licensed to operate in the region.

Other prominent exchanges, including Crypto.com and Bullish, are still navigating the licensing process under a temporary framework.

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Hong Kong’s strategic push to become a global cryptocurrency hub is further highlighted by its ranking as the second-highest adopter of cryptocurrencies globally, according to the 2024 Henley Crypto Adoption Index.

The city’s regulatory advancements and recent approval of Bitcoin and Ether-linked spot ETFs showcase its welcoming stance towards the crypto sector, despite the slow pace of adoption.

As Hong Kong continues to refine its regulatory frameworks, it stands poised to solidify its role as a pivotal player in the global cryptocurrency industry.