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Home BREAKING NEWS

Hong Kong Keeps Grace Period for Crypto Exchanges Despite Frauds

by BlockNews.com Team
November 27, 2023
in BREAKING NEWS, BUSINESS, CRYPTO
Reading Time: 3 mins read
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  • Hong Kong introduced new regulations for crypto exchanges in June 2022, requiring them to obtain a VASP license by June 2024. Exchanges can operate without a license until June 2023.
  • Hong Kong has seen several recent crypto exchange scandals, including unlicensed exchanges JPEX and Hounax allegedly operating Ponzi schemes and scamming users out of millions.
  • Despite the scandals, Hong Kong’s regulator does not plan to modify the licensing transition period. Some exchanges like BC Technology Group are pursuing licensing, but the future status of others remains uncertain.

In June 2022, Hong Kong introduced new regulations for crypto exchanges operating in the city. The new rules require exchanges to obtain a virtual asset service provider (VASP) license from the Securities and Futures Commission by June 2024. However, exchanges can operate without a license during a one-year grace period that ends in June 2023.

🚨 NEWS: 🇭🇰 Hong Kong's Securities and Futures Commission confirms it will not alter the one-year grace period for crypto exchanges.

The grace period allows unlicensed exchanges to operate until June 2024, before new regulations.

— BlockNews.com (@blocknewsdotcom) November 27, 2023

Recent Crypto Exchange Scandals in Hong Kong

The city has seen several crypto exchange scandals in recent months:

  • In September, unlicensed exchange JPEX collapsed after allegations of a Ponzi scheme led to 66 arrests and around $205 million in losses.
  • On November 25th, unlicensed exchange Hounax allegedly scammed $154 million from 131 residents through a Ponzi scheme. The exchange promised high returns but users could not withdraw funds.

No Changes Planned for Grace Period

Despite these incidents, Hong Kong’s Securities and Futures Commission says it does not plan to modify the grace period or other interim measures. The Commission’s CEO, Julia Leung, stated that fraud will still occur even if the grace period ends immediately.

Licensed Exchanges Continue to Emerge

Some exchanges are pushing forward with licensing plans. BC Technology Group, owner of OSL crypto exchange, recently secured $90 million in funding as it works to obtain a VASP license. However, the future licensing status of exchanges like Binance-linked HKVAEX remains uncertain.

Conclusion

Recent scandals have highlighted risks from unlicensed crypto exchanges in Hong Kong. However, regulators remain committed to the original VASP licensing transition plan. It is unclear if further exchange incidents could change this stance. Hong Kong continues to grapple with overseeing the emerging crypto sector.

Tags: BlockchainBusinesscryptoCrypto ExchangeCrypto Regulation
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