The Hong Kong Securities and Futures Commission (SFC) is poised to accelerate its regulatory momentum in the digital asset space, with plans to approve additional cryptocurrency exchanges before the end of 2025. Julia Leung, Chief Executive Officer of the SFC, recently confirmed that the regulatory body aims to issue more licenses as part of its ongoing efforts to balance innovation with investor protection.
This development comes on the heels of HKVAX becoming the third crypto trading platform officially licensed in Hong Kong. Following its recent approval, the SFC has revealed that 11 platforms are currently undergoing on-site assessments. Among the notable names in the pipeline are HashKey and OSL, both of which already hold enhanced licenses, while Bullish—parent company of CoinDesk—is also actively pursuing authorization.
Although the SFC has not disclosed the total number of applicants, its public register indicates between 11 and 16 active submissions. The potential for broader licensing reflects a strategic shift amid growing concerns that Hong Kong’s stringent regulatory framework could hinder its ambition to become a global hub for Web3 and blockchain innovation.
Regulatory Challenges and Industry Response
Despite Hong Kong’s proactive stance on financial technology, the path to licensing has proven challenging for many global players. Major exchanges such as Coinbase have withdrawn their applications, while others like OKX and Bybit have canceled their submissions—reportedly due to compliance requirements, including a directive to block access for mainland Chinese users.
In contrast, Crypto.com remains in the running, signaling continued international interest in the Hong Kong market. However, critics argue that the current approval process may be too rigid for an industry defined by rapid technological evolution.
Duncan Chiu, a member of Hong Kong’s Legislative Council, has voiced concerns over the SFC’s strict evaluation criteria, suggesting they may not align well with the agile nature of Web3 development. His comments come amid broader scrutiny of the regulator’s role in the high-profile JPEX scandal, which saw over 2,600 victims lose approximately $200 million in what authorities described as a fraudulent scheme. While several individuals have been arrested, no formal charges have yet been filed.
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Strengthening Trust Through Transparency
The JPEX incident underscored the need for robust oversight in the digital asset sector. In response, the SFC has intensified its review processes, focusing on key risk areas such as custody practices, cybersecurity infrastructure, and conflict-of-interest management. For instance, earlier concerns were raised about exchanges relying heavily on a small group of executives for asset management—a practice that increases operational vulnerability.
By enforcing stricter governance standards, the SFC aims to rebuild public confidence and position Hong Kong as a trustworthy gateway for institutional and retail investors alike. The upcoming wave of approvals is expected to include platforms that demonstrate strong compliance frameworks, transparent operations, and resilient technical architectures.
This regulatory tightening is not unique to Hong Kong. Across jurisdictions—from Singapore to Switzerland—regulators are recalibrating their approaches to accommodate decentralized technologies while minimizing systemic risks. Yet Hong Kong’s unique position as a bridge between East and West gives it a strategic advantage—if it can strike the right balance between control and innovation.
The Road Ahead for Hong Kong’s Crypto Ecosystem
As the year progresses, all eyes will be on how swiftly the SFC moves to grant new licenses. With 11 platforms in active evaluation, industry observers anticipate a phased rollout of approvals, potentially starting in late 2025. Such a move would signal renewed momentum for Hong Kong’s fintech ambitions and reinforce its status as a regulated but open market for digital assets.
Moreover, the integration of blockchain technology into traditional finance continues to gain traction. From tokenized funds to decentralized identity solutions, financial institutions are exploring use cases that could redefine how value is stored, transferred, and verified.
For startups and established firms alike, navigating this landscape requires more than technical expertise—it demands a deep understanding of compliance, risk management, and user protection. Those who succeed will not only gain access to one of Asia’s most sophisticated financial ecosystems but also set benchmarks for responsible innovation.
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Frequently Asked Questions (FAQ)
Q: How many crypto exchanges are currently licensed in Hong Kong?
A: As of now, three cryptocurrency exchanges—HashKey, OSL, and HKVAX—have received full operating licenses from the SFC.
Q: Why did some major exchanges withdraw their applications?
A: Exchanges like OKX and Bybit cited regulatory requirements, particularly the mandate to block users from mainland China, as a key reason for withdrawing or canceling their applications.
Q: What is the significance of the JPEX scandal?
A: The JPEX case exposed critical gaps in oversight and consumer protection, prompting the SFC to strengthen its licensing criteria and increase public awareness about unauthorized platforms.
Q: Is Hong Kong still aiming to become a Web3 hub?
A: Yes. Despite regulatory hurdles, Hong Kong remains committed to building a vibrant Web3 ecosystem through supportive policies, infrastructure investment, and collaboration with industry leaders.
Q: Are retail investors allowed to trade on licensed crypto platforms?
A: Yes, licensed platforms in Hong Kong can serve retail customers, provided they meet strict safeguards around risk disclosure, product suitability, and asset custody.
Q: What role does the SFC play in monitoring crypto exchanges?
A: The SFC oversees licensing, conducts regular audits, enforces compliance with anti-money laundering (AML) rules, and ensures fair trading practices across approved platforms.
The evolving regulatory environment presents both challenges and opportunities. For innovators willing to engage constructively with regulators, Hong Kong offers a compelling launchpad for compliant blockchain ventures.
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As the city moves toward a more structured digital asset framework, collaboration between policymakers, technologists, and financial institutions will be essential. With careful stewardship, Hong Kong can fulfill its vision of becoming a leading center for responsible crypto innovation in the years ahead.