Originally published on: September 13, 2024
**Introduction:**
The Securities and Futures Commission (SFC) of Hong Kong is contemplating the implementation of a new licensing regime for over-the-counter (OTC) cryptocurrency trading services. This move aims to enhance oversight and regulation within the digital asset industry.
**Exploring the Proposed Licensing Regime:**
Under the potential new regime, the SFC would collaborate with the Customs and Excise Department (C&ED) to supervise entities offering crypto OTC trading services. Initially, the responsibility for regulating these services was slated to be managed solely by the C&ED, as per a reveal in February.
**Understanding OTC Crypto Trading:**
OTC trading services enable users to conduct private transactions for buying and selling cryptocurrencies. To delve deeper into the workings of crypto OTC trading, refer to Cointelegraph’s comprehensive guide on the subject.
**Progress on Licensing Discussions:**
The SFC has engaged with current OTC trading service providers to discuss the implementation of a new licensing framework for cryptocurrency custodian services. While talks on these licenses are nascent, the SCMP report indicates ongoing deliberations.
**Identifying Suspicious Entities:**
In a bid to safeguard Hong Kong investors, the SFC has issued an “alert list,” highlighting suspicious virtual asset trading platforms or unlicensed operators in the region. This measure aims to protect investors from potential risks associated with unauthorized entities.
**Hong Kong’s Cryptocurrency Ecosystem:**
Hong Kong has been actively positioning itself as a prominent global hub for cryptocurrencies, attracting investors and businesses to its burgeoning digital assets sector. Notably, operating an unlicensed virtual asset trading platform in Hong Kong was criminalized as of June 1.
**Licensed Players in Hong Kong:**
Presently, only Hash Blockchain and OSL Digital Securities hold full operational licenses for virtual asset trading platforms in Hong Kong. Several prominent exchanges in the region are still awaiting regulatory approval, including Crypto.com, Bullish, and Matrixport HK.
**Conclusion:**
As Hong Kong continues to navigate the evolving landscape of digital assets, the proposed licensing regime for OTC crypto trading services underscores the commitment to fostering a secure and regulated environment for market participants and investors.
**Recommended Read:** How Chinese Traders Navigate the Crypto Ban: Insights into Strategies of Chinese Traders and Miners.
