SFC Warns of June 1 Deadline: Comply or Face Legal Consequences

Starting this Saturday, cryptocurrency trading platforms wishing to offer their services in Hong Kong will no longer be able to use the “grace period” set by the local regulator. If they have not obtained a license or applied for one by June 1, they will be committing a criminal offense.

SFC Warns Virtual Asset Trading Platforms as Non-Contravention Period Ends

Hong Kong's SFC has issued a statement reminding the public that the “non-contravention period” for virtual asset trading platforms (VATPs) operating in Hong Kong will end on June 1, 2024.

The regulator emphasized that all VATPs must be either licensed by the SFC or “deemed-to-be-licensed” VATP applicants under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). Operating a VATP in Hong Kong without proper licensing will be considered a criminal offense, and the SFC has vowed to take action against any breaches of the law.

“Investors are urged to trade virtual assets ONLY on SFC-licensed VATPs,” the SFC advised. “They should check the ‘List of licensed virtual asset trading platforms’ on the SFCs website to ascertain whether the VATP they are dealing with is formally licensed by the SFC.”

The regulator also cautioned that deemed-to-be-licensed VATP applicants are not formally licensed and must still demonstrate the implementation and effectiveness of their policies, procedures, systems, and controls to the SFC's satisfaction.

Deemed-to-be-licensed VATP applicants and their ultimate owners are required to comply fully with all SFC regulatory requirements and licensing conditions. The SFC expects these applicants to refrain from actively marketing their services or onboarding new retail clients until they have demonstrated compliance and obtained formal licensing.

In the coming months, the SFC will conduct on-site inspections of deemed-to-be-licensed VATP applicants to assess their compliance with regulatory requirements. The inspections will focus on client asset safeguarding and know-your-client processes.