New Rules for the Hong Kong Crypto Exchanges Put Market in Limbo Status

New changes are coming to the Hong Kong crypto exchange market as the Securities and Futures Commission (SFC) issues new policies for trading platform's operating licenses.

The SFC (Securities and Futures Commission) in Hong Kong has launched new guidelines on October 6th, which completely changes the life of cryptocurrency exchange licenses operating in the city. Almost all of the Chinese crypto exchanges are separated from OKEx, which is already operating under the new guidelines.

What Are the New Guidelines?

From what has been announced at the Hong Kong Fintech Week, platform exchanges trading digital currency that are securities will need Type 1 and 7 licenses, which can be obtained from the SFC. This will apply only to security tokens that are under purview, with AML and KYC being placed under strict review. Since qualified investors will be the only ones able to participate, most of the Chinese crypto exchanges are going to be blocked. They will have to service only professional investors and send monthly business reports to the SFC.

OKEx Has Already Realized The Same System

Ren Yunan, the CEO of OkLink has said soon after the rule has been issued that the OK group can be inquired through the traditional securities companies in Hong Kong, also that it will focus all its technical strength on digital asset trading and blockchain technology. He also stated that OKEx is prepared for supervision and for the market rules imposed by the SFC.

Will Huobi Be the First Licensed Hong Kong Crypto Exchange?

Leon Li, the founder of the Huobi Group has been made CEO, executive director and chairman for the Pantronics Holdings Ltd board. The speculation is that Huobi may become the first crypto exchange with a license in Hong Kong, but no commentaries about this have been yet released. At the moment, there are over 10 crypto exchanges operating in Hong Kong. The SFC’s new rule may have great impact over them if the supervision is accepted. However, many exchanges don’t see it as a good thing.

Ordinary Investors Must Go with Compliant Institutions

The qualified investors that can participate in licensed exchanges will have an investment portfolio with 8 million Chinese yuan or assets valued at 40 million Chinese yuan. When it comes to the ordinary investors, they need to entrust their funds to institutions that comply to these requirements, if they choose to operate with the licensed exchanges.