Hong Kong to VASPs: Secure license by February 29 or face shutdown

Digital asset firms in Hong Kong that fail to file license applications by February 29 must shut down their services and exit the special administrative region by the end of May, the city’s financial authority has reiterated.

Hong Kong will stick to its approach of risk-based and prudent regulations for digital assets, the Financial Services and the Treasury Bureau (FSTB) confirmed in a recent blog post. This approach adheres to the “same activity, same risk, same regulation” model, which subjects virtual asset service providers (VASPs) to the same stringent policies their financial sector counterparts face.

One of the critical requirements is the Securities and Futures Commission (SFC) license, which VASPs must apply for before the February 29 deadline. The watchdog will consider whether the applicant can meet its requirements and whether its operations in Hong Kong are substantial enough to warrant the license.

Only two companies have received the SFC’s nod—HashKey Group and OSL.

Any company that fails to apply for the license before the deadline must shut down operations by May 31. For applicants, those who fail to meet the SFC’s requirements will receive a “no-deeming notice” and will also be required to exit by the end of May.

As the deadline edges closer, the SFC pledged to ramp up its efforts to create awareness and boot out the uncompliant players. It also pledged to constantly update its online list of licensees to give the public up-to-date information on the platforms to use or shun.

The watchdog first made the list of licensees and applicants public in September 2023 following the $180 million JPEX exchange scam. At the time, it revealed that only two VASPs were licensed, and four others had pending applications. No major global brand was on the applicants’ list, including players like OKX and Binance, who had claimed to be working with the city’s regulators on a license.

The FSTB called on investors to remain vigilant and only deal with licensed platforms, as some unlicensed players have been involved in fraud.

“We will continue to use a multi-pronged approach comprising comprehensive public education, enhanced enforcement, and timely information dissemination to facilitate the robust and responsible development of the market,” the agency said.

Thai SEC cracks down on Zipmex

As the SFC pursues licensing for VASPs in Hong Kong, its Thai counterpart is cracking down on a troubled exchange for “its financial position and operational deficiencies.”

On Friday, the Thai Securities and Exchange Commission (SEC) announced that it had ordered Zipmex Exchange to suspend its services for 15 days for its deficiencies. According to the announcement, the SEC ordered the exchange to amend its management structure and remedy its liquid capital maintenance practices in early January. It also demanded that the exchange institute measures to prevent the improper access of customer funds. The Singaporean exchange had failed to comply.

“During the suspension of service, Zipmex must provide customers with the ability to withdraw assets at any time and contact customers to receive money and digital assets back, including transferring money and digital assets according to the wishes of customers,” the watchdog stated.

Zipmex was one of the dozens of VASPs caught up in the collapse of the Terra ecosystem and the consequent chaos. It filed for bankruptcy protection in July 2022, and since then, it has been fighting one court battle after another.

In its most recent news, Zipmex reportedly offered to repay its creditors $0.0335 on the dollar in a restructuring plan. It owes $97.1 million in debt.

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