Which virtual asset trading platforms are legal in Hong Kong?
With the popularity of cryptocurrencies, many people are starting to change their mind about cryptocurrencies and no longer view them in a negative light. Cryptocurrencies have recently launched Bitcoin ETFs and Ether ETFs, giving both retail and institutional investors an additional way to buy cryptocurrencies, which is good news from the cryptocurrency industry's standpoint.
I'm sure readers are concerned about cryptocurrency exchanges in Hong Kong, and this article will cover the current progress of each exchange's application for a license in Hong Kong, as well as what to look out for when choosing an exchange.
preamble
In order to protect investors, the Hong Kong government has decided to enact legislation to regulate the cryptocurrency industry and require exchanges to hold a Virtual Asset Service Providers (VASP) license before they can operate in Hong Kong. The legislation will come into effect on March 1, 2023, but there is a 12-month grace period during which retail investors can continue to use the exchanges as usual, and the exchanges will not be in violation of the law. However, once the grace period expires, exchanges will be required to hold a VASP license in order to provide cryptocurrency trading services to the public.
How do I choose an exchange?
When choosing an exchange, we must pay attention to two things, the first being itsReputationSecondly, it's the fact that it'sCertificate of Reserve。
We can tell the popularity of an exchange by its total trading volume, and popularity is usually positively correlated with reputation. We can identify the largest exchanges in Coinmarketcap, a well-known cryptocurrency market data platform. The larger the exchange, the lower the risk of a Rug Pull.
Link:https://coinmarketcap.com/rankings/exchanges/
I'm sure many of you have heard of the unfortunate incident of FTX. In short, there was a famous exchange that was backed by all sectors, but due to the founder's personal problems and financial decisions, the whole exchange went bankrupt. Since then, everyone has been much more vigilant about exchanges, and proof of reserves means whether the exchange's fiat currency and cryptocurrency reserves are 1:1 or not. If they are not, it means that the exchange may not have enough funds to pay them back (assuming the same black swan incident occurs).
Currently Compliant and Legal Cryptocurrency Exchanges
1. Hashkey Exchange
HashKey is an Asian cryptocurrency service provider founded in 2018, which was licensed by the SFC in 2022 under Type 1 (securities trading) and Type 7 (provision of automated trading services). It is worth noting that the SFC requires licensed exchanges to provide their clients with at least 50 % of insurance, meaning that in the event that an exchange is attacked or closes down resulting in a loss, users have at least 50% of their assets covered (the percentage is subject to adjustment depending on the insurance the exchange has purchased).
We have also done an article on Hashkey exchange, if you are interested in Hashkey, you can click the following link to read the related article:
2. OSL Digital Securities Limited
OSL is an exchange under the Hong Kong-listed BC Technologies Group, which will obtain Type 1 (securities trading) and Type 7 (provision of automated trading services) licenses from the Hong Kong Securities and Futures Commission (SFC) in 2020, and is unique in that it uses hot and cold wallet segregation technology, which means that OSL puts the majority of its platform assets in an offline cold wallet to protect them from hacking, which shows that it pays attention to the security of its assets. OSL has also partnered with Win-win Securities to launch a Hong Kong cryptocurrency spot ETF, but the details are yet to be announced.
OSL currently offers BTC/USD, ETH/USD and BTC/HKD, ETH/HKD pairs to retail traders (for OSL's quote trading platform).
Exchanges currently applying for licenses
Although many well-known exchanges started applying for licenses last year, most of them have recently withdrawn their applications. Below is a list of exchanges that are still applying for licenses. It is worth noting that just because an exchange is applying for a license does not mean that they can legally provide services, and if the license application is incomplete or there are important issues that have not yet been resolved, it may be rejected by the SFC.
Readers should note that the SFC provides up-to-date information on the exchanges on their official website, so to keep abreast of the progress of the exchanges' license applications you can click on the link below.
Exchanges that have withdrawn their applications
Many exchanges have decided to withdraw from the Hong Kong market due to different considerations, so they canceled the licenses they were applying for. These moves have left many newcomers feeling helpless and at a loss as to what to do. Below is a detailed list of the exchanges that have canceled their license applications as well as the matters that need to be taken care of.
2024 Frequently Asked Questions
Q: How can we trade in the future?
A: We can first use a compliant exchange such as Hashkey Exchange for deposits and withdrawals, then transfer to a chained wallet such as Metamask, OKX Web3 wallet, etc., and then trade on different decentralized exchanges (DEX) such as Jupiter, which has become very popular recently. Although the steps are more complicated, we don't have to worry about the licensing issues of centralized exchanges or the risk of not being able to withdraw our assets, and we enjoy complete asset autonomy.
Q: Are our assets currently safe?
A: If readers are still holding assets in unregulated/unlicensed exchanges, they need to pay attention to the announcement of the exchange, because they can be named by SFC anytime and the exchange needs to stop operation. The best thing to do is to withdraw the assets from the exchange to the hot/cold wallet first.
Q: Can I still use the P2P and C2C features of the exchange?
A: Apart from Hashkey and OSL, some centralized exchanges such as OKX (stopped applying for a license) have had their C2C coin buying function stopped (for legal reasons), while other large centralized exchanges (without a license) such as CoinSecure are operating normally, so this issue is subject to the decision of the exchanges.
Hong Kong users who are using OKX should be aware that
OKX has decided to withdraw OKX HK's application for a VASP license in Hong Kong after careful consideration of its business development prospects, according to an official announcement. Starting from May 31st, OKX will stop providing CEX services to Hong Kong users as required by the law.
Can I withdraw my funds? Are the assets still safe?
Coin withdrawal service is not affected, only need to withdraw funds before the end of August
**OKX Web3 wallet is not affected, you can withdraw cryptocurrency from OKX HK account to self-hosted wallet, such as OKX Web3 wallet, or other third-party platform account.
Things Users Remember to Do
Users have until August 31, 23:59:59 to present their assets.
Things Users Can't Do
- Users are advised not to make any deposits to their OKX accounts after May 31st, as funds may not be automatically credited.
- Any order that is not filled by 23:59:59 HKT on May 31st will be automatically canceled and the remaining balance will be credited to the OKX account.
Hong Kong users who are using Gate.
- Gate.HK will stop the registration of new users and will not register any new users.
- Gate.HK will not allow any asset deposits
- HK will take down all tokens including $BTC, $ETH, $BCH, $LTC, $SOL, $DOT, $MATIC, $UNI, $USDT, and will stop all trading until May 28, 2024 at 4:00pm (HKT). Events
- Gate.HK will continue to allow users to withdraw assets until August 28, 2024
- Gate.HK will cease all marketing activities in Hong Kong.
- Gate.HK Recommends Users to Withdraw Assets from Platform by August 28, 2024
Disclaimer
The content of this article is for reference only, investors should exercise independent judgment, invest prudently and at their own risk, this article does not provide or attempt to persuade the audience to do trading or investment basis, the content is for sharing purposes only, and should not be regarded as investment advice.It does not represent the views and position of Monsterblockhk.All information and opinions are current as of the date of the judgment. In addition, if a judgment is rendered on aIn this siteAny content related to virtual asset trading platforms that have not yet obtained a license to operate virtual asset trading platforms in Hong Kong, including but not limited to text introductions, pictures, offers, events, etc., are only available to users outside the Hong Kong Special Administrative Region.
According to the Hong Kong Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022, after June 1, 2023, all centralized virtual asset trading platforms operating in Hong Kong or actively promoting their services to Hong Kong investors will be licensed and regulated by the SFC, and any related unlicensed activities will be a criminal offence. For more information and details of the legislation, users may refer to the SFC website.