This move follows the SFC’s earlier reviews this year, which revealed weak control mechanisms at some crypto platforms, and aims to raise security awareness across the industry.

Access Controls Become Mandatory

Hong Kong SFC’s new regulations require licensed crypto trading platforms to establish robust wallet infrastructure and implement strict access controls to protect user assets.

Platforms will not only be responsible for securely storing users’ funds but also for creating transparent and auditable mechanisms in their transaction processes and governance structures.

These changes provide an additional layer of security against potential cyberattacks while aiming to boost investor confidence in fund protection. Through this, the SFC seeks to strengthen operational resilience in Hong Kong’s digital asset ecosystem and promote alignment with global standards.

Response to Custody Failures

Under the “Protection” pillar of its ASPIRe roadmap, the SFC has drawn important lessons from targeted reviews conducted to identify gaps in the industry. Additionally, high-profile custody failures and wallet security issues at overseas platforms have prompted the SFC to strengthen its regulatory approach. These measures aim to ensure the secure storage and management of digital assets while minimizing risks for investors.

Real-Time Monitoring

The new standards clearly define senior executives’ responsibilities in protecting customer funds. In addition, secure cold wallet operations, third-party wallet oversight, and real-time threat monitoring systems are made mandatory for platforms.

Through these measures, the SFC aims to ensure that Hong Kong’s digital asset sector develops on a sustainable, reliable, and investor-friendly foundation. Dr. Eric Yip, Executive Director of Intermediaries at the SFC, emphasized the importance of the standard, stating: “The protection of customer assets must always remain the top priority for licensed platforms, especially given the global risks facing the industry.”

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What’s in the New Staking Rules?

Under the new circular, crypto exchanges must:

• Obtain written approval before offering staking services.
• Retain control over staked assets — no third-party custody allowed.
• Fully disclose all risks, fees, lock-up periods, and custodial details.
• Report staking activities to the SFC regularly.

These rules also apply to regulated funds with over 10% exposure to staked digital assets. Funds can only stake assets available to the public on SFC-approved platforms, and leveraged staking is strictly prohibited.

SFC Emphasizes Web3 Vision

At the Hong Kong Web3 Festival, SFC’s Christina Choi stated:

“The SFC is committed to supporting Hong Kong’s Web3 journey.”

Citing NFT market volatility, she emphasized a pragmatic approach to Web3 — focusing on strong fundamentals and sustainable ecosystem building rather than chasing hype.

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Hong Kong remains a top 3 financial hub globally, offering regulatory clarity and easy access to Asian markets — a major draw for Web3 firms.

ASPIRe Roadmap: Future-Proofing Crypto

The city’s ASPIRe strategy includes 12 initiatives across five pillars, such as market access, regulatory optimization, and blockchain efficiency — all aimed at cementing Hong Kong’s crypto leadership.

Choi emphasized the convergence of traditional finance and digital economies:

“The zero-to-one breakthrough has been made; now it’s about going from one to 100.”

NFT Market Weakens

SFC’s announcements come amid a 70% drop in NFT daily trading volume. Bybit shut down its NFT marketplace, following in the footsteps of X2Y2, as interest continues to wane.

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Julia Leung, CEO of the Hong Kong Securities and Futures Commission, stated that bitcoin has clearly demonstrated its staying power as an alternative asset.

Most central bankers and economists would say virtual assets like bitcoin and ether have no inherent value, Leung said in a speech at the Greenwich Economic Forum Hong Kong on Wednesday.

“I disagree. While the intrinsic value debate continues, it is a fact that 15 years later Bitcoin has gone through many boom and bust cycles and has clearly demonstrated its staying power as an alternative asset,” Leung said. “More clearly, its core technology — DLT — is here to stay.”

Leung’s comments on bitcoin come as the SFC officially introduced a requirement for crypto trading platforms to obtain a license to serve retail investors in Hong Kong.

Hong Kong lawmaker Duncan Chiu has expressed concerns about “overly stringent” regulations for licensing crypto exchanges, criticizing that these rules prevent major global exchanges from entering Hong Kong and reduce market confidence.

In his speech, Leung stated that support for the Web3 ecosystem in Hong Kong “should not be taken as an endorsement of the VA asset class.”

“As things stand, VAs are known for their highly speculative nature and extreme price volatility,” Leung added. “Therefore, we have ensured that extensive security measures are in place to protect investors while meeting their demands.”

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The post Hong Kong Halts Exchange License Applications; Noncompliant Platforms Face Closure appeared first on Coin Engineer.

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The licensing process, which is overseen by the Hong Kong Securities and Futures Commission (SFC), reveals that Bybit applied on Wednesday under the name Spark Fintech Limited. According to information posted on the SFC’s website, 14 cryptocurrency-focused firms, including Bybit, are on the list of current license applications being considered by the regulator, such as OKX, which applied on November 16.

According to a statement by the cryptocurrency exchange, obtaining a Virtual Asset Trading Platform (VATP) license in Hong Kong is critical for the company to strengthen its operations and institutional customer relationships in the region. Hong Kong’s strategic location and advanced financial infrastructure make it an ideal hub for Bybit to serve its Asia-Pacific operations.

Bybit Exchange Commission Discount Registration Link

The post Bybit, Hong Kong License Application! appeared first on Coin Engineer.

Hong Kong announce that it will disclose a list of companies applying for newly launched retail crypto trading license following the JPEX controversy. The Securities and Futures Commission (SFC) stated in their announcement that they will publish a list of licensed virtual asset trading platforms, a list of closed VATPs, and a list of VATPs considered licensed after June 1, 2024.

The SFC stated in their announcement, “To help the public more easily identify and increase awareness of suspicious VATPs operating in Hong Kong, the SFC will develop and publish a specific list of suspicious VATPs that is easily accessible and featured on the SFC’s website.”

SFC Licensing Director and Fintech Unit Head Elizabeth Wong stated in a press conference that publishing the list of applicants allows the public to check whether platforms have made false declarations related to license applications. She also said, ‘According to local media RTHK, there are currently four companies in the preliminary process for applying for a license.

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Raid!

This move by the SFC comes after the regulator warned on September 13 that the crypto phenomenon and trading platform JPEX made “false or misleading statements on social media” by stating that the company had applied for a virtual asset trading license in Hong Kong.

Last week, 20 different places were raided by the Hong Kong police and 11 people were detained from various locations.

As a response to the police intervention, JPEX officials stated they had received “unfair treatment”. In another announcement made by the exchange, they called for their users in Hong Kong to “temporarily stop depositing new assets and crypto assets to the platform”.

Operations manager of crypto platform VDX, Donald Day,

said, “It’s very encouraging that Hong Kong is ready to impose sanctions against unlicensed and criminal activities. It’s also very positive to see that there are people who often force ignorant investors to trade on JPEX, also known as ‘KOL’.

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