Hong Kong Extends Grace Period for Cryptocurrency Exchanges Despite Recent Scandals

Grace Period Remains

Hong Kong's Securities and Futures Commission has announced that the one-year grace period for cryptocurrency exchanges operating in the city will continue, despite recent scandals. The CEO of the commission, Julia Leung, stated that even if the grace period were to end, fraud would still occur. Therefore, there are no plans to modify the grace period or other measures at this time.

Regulations Introduced in June

In June, new regulations were introduced requiring crypto exchanges in Hong Kong to obtain a virtual asset service provider (VASP) license from the Securities and Futures Commission by June 2024. Failure to comply could result in deregistration. However, unregistered exchanges are still allowed to operate during the interim transition period.

Recent Scandals

The special administrative region has been hit by several crypto scandals in recent months. In September, unlicensed crypto exchange JPEX collapsed after allegations of a Ponzi scheme, resulting in 66 arrests and an estimated loss of $205 million. More recently, another unlicensed exchange called Hounax reportedly scammed 131 residents out of $15.4 million through a Ponzi scheme. Scammers posed as investment experts and promised high returns, but users were unable to withdraw their funds.

Efforts to Obtain License

Despite the scandals, some exchanges are still actively seeking a license in Hong Kong. HKVAEX, a Binance-linked exchange, is currently in the process of applying for a license. Additionally, BC Technology Group, the owner of Hong Kong crypto exchange OSL, recently secured a $90 million investment from blockchain firm BGX.