Crypto license applications in Hong Kong experience a significant increase

The Securities and Futures Commission (SFC) in Hong Kong has received a total of 18 applications for crypto licenses from both local and global players within a span of two months. On February 20, Huobi HK, the Hong Kong branch of the crypto exchange Huobi, confirmed that it had applied for a virtual asset trading platform license with the Hong Kong SFC. Other prominent crypto exchanges, including Crypto.com, OKX, Bybit, and DFX Labs, have also filed for the same license since mid-November 2023. The licensing process involves stringent due diligence checks, such as comprehensive financial audits, which require Web3 firms to invest up to $25 million in building their license applications.
The recent clarity provided by Hong Kong regarding exchange licensing has attracted traditional brokerages as well. Tiger Brokers, a Chinese stock brokerage, upgraded its Type 1 SFC license in January to include crypto trading for professional investors and financial institutions based in Hong Kong. John Fei Zeng, the CFO and director of Tiger Brokers, stated in an interview with Cointelegraph that the regulatory environment in Hong Kong is favorable for crypto adoption.
In addition, the Hong Kong regulator received its first application for a spot Bitcoin (BTC) exchange-traded fund on January 26 from Harvest Hong Kong, one of China’s largest fund managers. Hong Kong has also implemented a minimum insurance requirement of 50% for licensed crypto exchanges that handle customers’ assets. OSL Exchange, for example, has disclosed that this minimum coverage applies to all assets under custody. OSL has partnered with Canopius, a syndicate of underwriter Lloyds of London, to provide an insurance policy that covers 95% of its users’ assets for a period of two years.