During the 2024 Fintech Week, the SFC of Hong Kong’s Executive Director of Intermediaries, Dr. Eric Yip, outlined the regulator’s roadmap for the VATP industry. One such effort is to simplify the licensing procedures of VATP, especially for those candidates who have already been taken to be licensed.
The SFC intends to speed up this process with the help of inspections conducted on-site and consistent sharing of information with the management of these platforms. The goal is to control compliance covering work processes and not compromise the transparency of operations.
The SFC expects the initial round of formal licenses for VATP applicants to be issued by the end of 2024. Currently, 14 platforms hold deemed-to-be-licensed status, including well-known names like Crypto.com and Matrixport. Only three exchanges have obtained a full license from the SFC, highlighting the importance of the new streamlined process.
The SFC also plans to launch a consultative panel for VATPs in early 2025. This panel will include representatives from each licensed VATP and serve as a channel for communication between the regulator and industry stakeholders. The goal is to foster dialogue on regulatory developments, helping the SFC align its policies with industry needs.
The insights gathered through this panel will inform a forthcoming white paper outlining the SFC’s regulatory priorities for the virtual asset sector. Moreover, regarding relevant topics, the SFC will also engage with other stakeholders to make its regulatory policies relevant to the ever-developing digital asset market. This plan seeks to offer a conducive environment that allows the virtual asset trading sector in Hong Kong to grow.
Beyond licensing, the SFC supports tokenization efforts in Hong Kong. As part of its involvement in the Hong Kong Monetary Authority’s Project Ensemble, the SFC aims to build infrastructure to support tokenized assets. This project focuses on setting standards for the settlement of tokenized assets within the asset management sector, helping to create a robust framework for integrating digital assets into traditional financial systems.
The SFC is also working closely with the Hong Kong SAR Government and other regulatory entities to develop comprehensive frameworks for virtual asset trading services and custody provisions. This collaboration aims to strengthen the regulatory environment and ensure digital asset services operate under clear and consistent guidelines.
In addition, Dr. Yip emphasized that the SFC adopted the approach of maintaining a balance between investor protection and market development. The SFC is working to meet the requirements for regulating virtual assets and creating an environment conducive to trading and tokenization in Hong Kong in the upcoming years.