Hong Kong Grants Conditional Licenses to Four Crypto Exchanges

The Hong Kong Securities and Futures Commission (SFC) has granted conditional licenses to four virtual asset trading platforms: Accumulus GBA Technology, DFX Labs, Hong Kong Digital Asset EX, and Thousand Whales Technology. These licenses are subject to the platforms meeting specific regulatory requirements before they can fully operate in the region.

The move is part of the SFC’s risk-based inspections, introduced in June, designed to ensure compliance with Hong Kong’s evolving virtual asset regulations. These inspections aim to protect investors while allowing for the growth of the crypto sector. In order to proceed with their operations, the licensed exchanges must undergo third-party vulnerability assessments and penetration tests. These security tests will identify and address any potential weaknesses in the platforms, ensuring that they can securely handle digital asset trading.

The SFC will oversee the process to ensure the platforms resolve any issues identified during the inspections. According to Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, the regulator has been working closely with the platforms to clarify their expectations and expedite the licensing process. This collaboration will continue into the second phase, which will involve external assessors evaluating the platforms under the SFC’s supervision. If they meet all conditions and pass the assessments, the platforms will be authorized to expand their operations.

The SFC has also released a circular providing a detailed roadmap for the licensing process, which aims to streamline the compliance journey for virtual asset platforms. This guidance will help platforms navigate the regulatory environment while ensuring they maintain high standards of security and compliance. These licenses are important as they ensure the platforms operate legally and securely, with measures in place to safeguard user funds, prevent fraud, and deter market manipulation.