London Daily

Focus on the big picture.
Sunday, Aug 02, 2026

Hong Kong’s New Criteria on Crypto Exchanges Actually Isn't Important

Hong Kong’s New Criteria on Crypto Exchanges Actually Isn't Important

Hong Kong rolls out a new framework for crypto exchanges, which could establish an important precedent for the local market.

On Nov. 7, Ashley Alder, the CEO of the Securities and Futures Commission of Hong Kong, said at a conference that a new framework for crypto exchanges will be implemented. Almost immediately after the announcement, Reuters reported that a crypto exchange based in Hong Kong called OSL became the first to apply for a license with the SFC.

While the introduction of a license for crypto exchanges by the government of Hong Kong is widely viewed as positive reinforcement for the growth of the crypto sector in Asia, some view it as a redundant solution that fails to facilitate the needs of local exchanges.


Why is it redundant?

In a conversation with Cointelegraph, George Harrap, the co-founder and CEO of Bitspark, a company based in Hong Kong that allows crypto-to-cash trades, said that the framework is not applicable to the majority of exchanges that operate within the region.

Simply put, because the framework restricts the scope of the license to companies that facilitate security token trades and serve institutional investors, it does not provide additional regulatory clarity to local companies. Harrap noted that this will not apply to any existing Hong Kong-based exchanges:

Most exchanges based in Hong Kong that provide support to local users and investors in mainland China through over-the-counter trading are focused on offering liquidity for major cryptocurrencies like Bitcoin (BTC) and Ether (ETH) rather than regulated security tokens.

As such, the framework released by the SFC, in its current form, is not necessarily relevant to major exchanges that operate in Hong Kong. “So as I can see, this is not useful and nobody except perhaps lawyers and consultants were asking for this,” Harrap added.


The positive side of the crypto exchange license

Although the SFC’s criteria for crypto exchanges has seen mixed reactions from the local community, several exchange executives consider it to be an overall positive factor for growth over the long term.

Jason Lau, the chief operating officer at OKCoin and head of business development at OKGroup, said that having an option to be regulated -regardless of the scope of the regulation -is a big step for the industry.

Dovey Wan, a founding partner at Primitive Crypto, said that the framework could positively affect local exchanges serving mainland Chinese investors like Huobi, adding that it is “big” for the sector.

Despite being an important crypto exchange market in the aftermath of the imposition of a ban by the People’s Bank of China on trading of cryptocurrencies, Hong Kong has lacked clear guidelines for exchanges for years. It can be argued that based on the structure of the license criteria, guidelines in Hong Kong still remain ambiguous for local companies.

However, firms anticipate that it could become a stepping stone toward the introduction of a more practical and comprehensive regulatory framework for trading platforms in the future.


Will it really affect exchanges serving mainland investors?

In Hong Kong, many mainland investors are said to be trading cryptocurrencies in Hong Kong through Tether (USDT), a stablecoin whose value is pegged one-to-one with the U.S. dollar. Often, traders purchase Tether to invest in major cryptocurrencies and convert Tether to the Hong Kong dollar to sell their cryptocurrency holdings for fiat, as reported by SCMP.

Previously, Terence Tsang, the CEO of Hong Kong- and Taiwan-based cryptocurrency exchange TideBit, said that the scrutiny from the Chinese government was targeted at local exchanges in China claiming to be based outside of the country, not at companies that are already based outside of the nation.

Since exchanges in Hong Kong that have been facilitating trades for mainland investors have operated without significant roadblocks throughout the past two years, and given that the scope of the SFC’s framework is not inclusive of major cryptocurrencies, Harrap told Cointelegraph that the license criteria is unlikely to have any impact, adding that:


Stricter oversight is expected

Regardless of the direction the SFC may be heading with its newly released criteria for exchanges, Hong Kong is moving toward tightening its oversight over the local cryptocurrency market.

In December 2018, the SFC directly contacted cryptocurrency exchanges rumored to have had troubles with processing deposits and withdrawals for users, and requested several initial coin offerings to shut down.

The SFC’s warning against cryptocurrencies late last year was primarily targeted at ICOs, but it emphasized that it will look over exchanges operating in the local market. Even at the time, Timothy Loh, a Hong Kong-based lawyer, said that the requirements set forth by the SFC could be burdensome for local companies.

Hence, even though the general sentiment around the approach of the SFC remains positive among local executives and companies, it is possible that the additional requirements could create a tougher environment for companies to operate in. This could be especially true for Japan, South Korea and other Asian markets creating clear regulatory frameworks to support local companies.

In recent months, major markets with top fiat-to-crypto trading pairs -such as the United States dollar, Japanese yen, South Korean won and British pound -have started to increase compliance with the guidelines created by the G-7’s Financial Action Task Force.

As the global cryptocurrency exchange market adapts clearer policies for trading platforms that are described by the FATF as “Virtual Asset Service Providers,” Hong Kong and others that have struggled to clearly define rules for exchanges in the past are expected to embrace more efficient policies.

Newsletter

Related Articles

0:00
0:00
Close
Finland Deploys Commercial-Scale Thermal Batteries Using Crushed Rock to Store Renewable Grid Energy
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Sainsbury Agrees to Sell Argos in £120 Million Deal to Private Consortium
High Court Clears Way for Construction of Chinese Embassy at Royal Mint Court
UK Fuel Prices Climb to Multi-Month Highs as Strait of Hormuz Tensions Disrupt Oil Supplies
Severe Summer Drought and Record Heat Put UK Harvests at Risk
Prime Minister Andy Burnham Faces Labour Backbench Opposition Over Potential Support for New North Sea Oil and Gas Drilling
Bank of England Warns Inflation Will Stay Above 3% as Middle East Energy Shock Prolongs Cost-of-Living Pressures
Andy Burnham has Announces Plans to Redistribute Income Tax Revenue to English Mayors
Early-Release Scheme Faces Fresh Scrutiny as Reoffending and Prison Recalls Rise
Police Phone Checks Followed Report on Murder of MI5 Agent Inside Sinn Féin
Archbishop of Canterbury Reaffirms £100 Million Reparative Justice Fund During Ghana Visit
Charities Allege French Police Used Tear Gas Against Channel Migrants
Norwegian Teenager Convicted Over Iran-Linked Murder Plot in Britain
Christian Organisations File Charity Complaints Against Amnesty International UK
Ofgem Tightens Grid Connection Rules for New Data Centres
FTSE 100 Reaches Record High Despite Global Technology Sell-Off
Millions of UK Households Urged to Check Eligibility for Winter Energy Discount
Labour Restores Parliamentary Whips to Diane Abbott and Joani Reid
UK Supreme Court to Hear Challenge Over Palestine Action Ban
UK Commits More Than £8.4 Billion to Dreadnought Nuclear Submarine Programme
England Declares Severe Drought as Wildfire Burns Near Sizewell Nuclear Site
Bank of England Holds Interest Rates at 3.75% as Middle East Tensions Fuel Inflation Risks
Drought Status Extended Across All of Wales as Heat and Dry Weather Deepen Environmental Strain
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
UK Business Confidence Climbs to Four-Month High
Greater Manchester Gains Expanded Powers Under Regional Funding Reforms
UK Supreme Court to Hear Appeal Over Palestine Action Terror Ban
Shell's Quarterly Profit Doubles to Nearly $10 Billion on Higher Energy Prices
UK Government Removes VAT From Household Electricity Bills
Exceptional Drought Grips Half of England as Wildfire Threatens Sizewell
Bank of England Holds Interest Rates at 3.75% as Inflation Risks Persist
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The chief executive of the popular gaming company laid off many employees and his pay rose to 38 million dollars
UK Employment Holds Steady as Wage Growth Remains Moderate
England to Introduce Artificial Intelligence into Secondary School Curriculum
Wales Launches £1.2 Billion Industrial Regeneration Programme
High Court Upholds UK Digital Surveillance Framework
Northern Ireland Reaches Budget Agreement on Infrastructure and Public Sector Pay
Home Office Expands Digital Border Checks Nationwide
UK Approves Major North Sea Wind and Carbon Capture Project
The World's Most Terrifying Smartphone: Recording, Documenting, and Reporting to the Regime
Scotland Approves Major Renewable Energy Expansion
UK and United States Sign AI and Semiconductor Cooperation Pact
UK Treasury Tightens Fiscal Controls After Gilt Market Volatility
Bank of England Holds Interest Rates at 4.5%
UK Unveils £10 Billion NHS Funding Overhaul and Workforce Reform
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
UK: Former Football Association Leaders Call for World Cup Boycott Over FIFA Privatization Plan
Forbidden Love: China severs millions from their virtual partners
×