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HomeCryptoHong Kong reforms regulations, forcing unlicensed crypto companies to leave

Hong Kong reforms regulations, forcing unlicensed crypto companies to leave

Hong Kong, a financial center with growing interest in cryptocurrencies, is undergoing regulatory reform. The Securities and Futures Commission (SFC) has increased its power, forcing unlicensed crypto businesses out of the market and tightening its grip on companies seeking licenses.

Regulatory reform

Until recently, Hong Kong operated with a relatively lax regulatory framework for cryptocurrencies. This has attracted a host of cryptocurrency exchanges, some with questionable practices. To improve this “Wild West” situation, the SFC launched a licensing regime in February 2024.

Deadline compliance for unlicensed exchanges ended on May 31, causing a mass exodus. Big names like Bybit, GateHK and Huobi Hong Kong have been forced to shut down operations or leave the region altogether.

This crackdown is aimed at protecting investors from scams and fraud. For licensed exchanges, the SFC requires it follow ccertain standards, including strong security measures and know-your-customer (KYC) verification. These KYC checks help prevent money laundering and other illegal activities that can plague the cryptocurrency space.

Balance safety with innovation

While increased consumer protection is a welcome change, stricter regulations may come at a cost. Strict licensing requirements may hinder the growth of new and innovative crypto businesses in Hong Kong.

Startups with groundbreaking ideas may find the compliance process too expensive or time-consuming, hindering their potential to become a regional hub for cutting-edge blockchain technology.

Furthermore, some Licensed trading platform, burdened by the new regulations, may choose to leave the Hong Kong market altogether. This could limit the options available to retail investors, potentially pushing them towards unregulated platforms in other jurisdictions, which could expose them to significant risks than.

Annie

According to Bitcoinist

Mark Tyson
Mark Tyson
Freelance News Writer. Always interested in the way in which technology can change people's lives, and that is why I also advise individuals and companies when it comes to adopting all the advances in Apple devices and services.
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