Virtual asset platforms warned on illegal trade

Staff reporter

Hong Kong's securities regulator reminded virtual asset trading platform operators to stay away from unlicensed activities in the city, as the transition period of its mandatory regulations will end on Saturday.

The Securities and Futures Commission said license applicants still need to show the actual implementation and effectiveness of measures to enhance their policies, procedures, systems and controls to meet the regulator's requirements, according to a statement released yesterday.

It comes as only two licenses were granted by the SFC and seven out of 24 platforms withdrew their applications before the 12-month non-contravention period through June 1, including OKX Hong Kong and Hong Kong VAEXC.

Hong Kong established the licensing system and regulatory requirements for virtual asset service providers in June last year and SFC will review applications.

SFC also reminded all platform operators not to actively promote their services or onboard new retail clients before being formally licensed.

It said the platforms and their owners must prevent mainlanders from accessing any of their virtual asset-related services and obey other regulations.

In the coming months, SFC will conduct on-site inspections to ascertain applicants' compliance with its regulatory requirements, with a focus on safeguarding of client assets and know-your-client processes.