Hong Kong’s Securities and Futures Commission plans to expand the scope of licensing for cryptocurrency exchanges and launch policy guidelines on artificial intelligence to strengthen financial innovation in key areas.
- Hong Kong's Securities and Futures Commission plans to issue full licenses to more cryptocurrency exchanges by the end of 2024.
- Currently, only three exchanges have full licenses, while another 11 are awaiting approval after provisional licensing.
- The government has issued AI policy guidelines to promote the integration of AI into the financial market.
The Securities and Futures Commission (SFC) of Hong Kong has announced plans to license more cryptocurrency exchanges by the end of 2024. Yip Chi Keung, executive director of intermediaries at the SFC, said he shared the latest news during Hong Kong's annual Fintech Week event, while also providing an in-depth introduction to the city's ongoing regulatory work.
Mr Ye said the SFC has been working closely with applicants to provide feedback, prompting many exchanges to devote sufficient resources to ensure full compliance with regulatory standards.
It is worth noting that Hong Kong launched a digital asset licensing framework in June 2023, opening the door to retail cryptocurrency trading on licensed platforms. However, so far, only three platforms, HKVAX, HashKey and OSL, have obtained full licenses. Another 6 platforms are currently operating under temporary licenses, waiting for final approval after meeting the SFC's compliance requirements.
The regulator expects to complete the licensing process and finalize the list of fully licensed exchanges by the end of December.
CSRC strengthens supervision
The road to regulation has not been smooth for the cryptocurrency exchanges under scrutiny. During the inspection, the SFC found multiple compliance issues with these “deemed licensed” platforms. In October, SFC CEO Leung Fung-yee said that these inspections have highlighted areas where companies are not compliant.
After completing the necessary reforms, the companies will be granted operating licenses. However, Mr. Ye said full operating freedom will only be granted after the exchanges work with the CSRC to complete a comprehensive third-party review.
By early 2025, the SFC plans to establish an advisory group with these licensed exchanges to foster a collaborative regulatory environment that prioritizes investor protection and market stability.
During this rigorous licensing process, several large exchanges such as OKX, Gate.io and HTX chose to withdraw their applications, citing regulatory challenges. However, companies such as Bullish and Crypto.com are still listed as license applicants on the SFC website, highlighting the continued interest in Hong Kong’s cryptocurrency industry.
New policies for AI in finance
In addition to expanding the scope of cryptocurrency license issuance, Hong Kong is also advancing regulatory measures for artificial intelligence (AI) in the financial sector. In a separate statement on Monday, Hong Kong government officials outlined Hong Kong's first set of AI policy guidelines, aimed at promoting the role of AI in financial markets and other key areas. The guidelines encourage regulators to establish a unified AI implementation framework.
In addition, Hong Kong has introduced tax incentives for cryptocurrencies as part of its ongoing efforts to attract global crypto talent. Hong Kong Financial Services and the Treasury Secretary Paul Chan said that Hong Kong's financial industry has a "huge market and rich scenarios" and has unique advantages in supporting artificial intelligence applications. He reiterated the government's commitment to enact legislation before the end of the year.