Hong Kong authorities announced the upcoming start of the licensing process for centralized crypto exchanges.
This week, the Hong Kong regional authorities announced that they will allow access to digital assets to retail investors. To do this, they will license crypto trading platforms, or exchanges, within their jurisdiction. According to the Securities and Futures Commission (SFC), the authorizations would begin to be delivered shortly.
With this new step, the authorities ascertained their interest in turning the province into a world epicenter for trade with digital currencies. The autonomous characteristics of this province allow it to make a difference from the central Chinese mainland government. Consequently, for Beijing, the use of cryptocurrencies is classified as a financial crime.
Thus, on Tuesday, the regulators said that those companies that wish to comply with the guidelines can apply for the license. Likewise, the authorities showed signs that the regulations will be harsh, as they are not willing to allow actions outside the legal risk of investments.
Crypto Exchanges to Opt for Licenses Soon
It is remarkable that the Hong Kong authorities welcome crypto trading platforms (or exchanges) with open arms. This would begin the opening of the Chinese province to these assets under a clear and strict regulatory framework. Some companies may even consider it stricter than appropriate.
In any case, the guidelines for digital asset exchanges include security and custody requirements. Added to this are cybersecurity standards, as well as the separation of assets from clients and others. For some players in the area, these measures are positive, since they provide a clear perspective for companies in the sector.
This scenario contrasts with the reality of the United States, where the authorities of various agencies claim the right to govern cryptocurrencies. This creates confusion in the industry, and the main representatives of the area ask for a clear regulatory framework, or else they could leave the country.
In the North American nation, the federal government and local governments act on the sector according to their particular conveniences. For mining companies, for example, this causes confusion and frustration from the country’s authorities with the greatest hash power within its borders.
Hong Kong’s move to license exchanges saves the crypto sector a headache. Although regulations may be strict, clarity allows companies to adapt.
Guidelines Take Effect in One Week
Starting next June, the guidelines of the new regulation for digital retail will come into effect. It will then begin the slow process of consigning license applications by crypto exchanges, review, and approval.
The aforementioned announcement by the regulators highlighted that up to now almost all of the platforms are not properly registered. Consequently, the agency adds that those companies that do not wish to comply with the guidelines, but now have access to the public, must follow some steps, including the organized withdrawal of their operations from the Hong Kong market.
With this in perspective, the provincial authorities convert the licensing process to crypto exchanges as a step in the announced direction. The next thing will be to present themselves as attractive matches for other companies, since Hong Kong’s possibility of becoming a global epicenter for virtual assets depends on it.
By Audy Castaneda