Hong Kong Sets Deadline for Virtual Asset Service Providers to Apply for Licenses

Hong Kong Sets Deadline for Virtual Asset Service Providers to Apply for Licenses

The Hong Kong government has issued a clear directive to virtual asset service providers (VASPs): apply for a license by February 29 or cease operations by May 31. This announcement, made by Christopher Hui, the Secretary for Financial Services and the Treasury, underscores the city’s commitment to regulating the burgeoning virtual asset industry.

Hui highlighted a transitional period for VASPs operating in Hong Kong prior to the establishment of a licensing system by the Securities and Futures Commission (SFC). To continue their operations within the city, these service providers must submit their license applications by the end-of-February deadline.

The SFC will issue a “no-deeming notice” to VASPs failing to meet the necessary regulatory requirements, signaling they must halt operations by May 31. This deadline also applies to any service providers who have not applied for licensing by the specified date.

With the application deadline approaching, the SFC is gearing up for enforcement activities, including notifying disapproved service providers and enhancing its public awareness campaigns.

Hui cautioned investors about the volatile nature and potential lack of intrinsic value in virtual assets, advising the use of SFC-licensed platforms for transactions. The government is also considering the regulation of over-the-counter trading venues, given their role in recent fraud cases.

This move by Hong Kong aligns with global efforts to bring clarity and security to the virtual asset space, including debates in the United States regarding the regulation of crypto assets by the SEC.

Hong Kong’s firm stance on licensing VASPs reflects a broader trend towards the regulation of digital assets, aiming to protect investors and ensure the integrity of the financial system in the face of evolving technological landscapes.

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