Hong Kong Securities Regulator Issues Warning to Unlicensed Virtual Asset Trading Platforms

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The region’s securities regulator has said that Hong Kong crypto investors must only use or trade on approved virtual asset trading platforms. The regulator urged crypto investors using platforms not featured on its two lists to close accounts or transfer funds to licensed entities.

Verifying a Virtual Asset Trading Platform’s Regulatory Status

The Hong Kong Securities and Futures Commission (SFC) has reminded crypto investors in the region to only use or trade on approved virtual asset trading platforms (VATP). In a statement released on Feb. 5, 2024, the SFC emphasized the importance of verifying a VATP’s regulatory status before engaging in any transactions.

The Hong Kong regulator’s latest warning came a few months after it asked users to refrain from using unlicensed operators. The SFC suggested at the time that many such entities had no realistic prospect of getting the license.

Meanwhile, in its latest warning, the SFC also urged investors to pay particular attention to the list on which the VATPs are featured. According to the regulator, there are two lists, one for licensed entities and another for those that applied for a license.

“VATPs on the ‘List of licensed virtual asset trading platforms’ are formally licensed by the SFC. VATPs on the ‘List of virtual asset trading platform applicants’ include VATPs operating in Hong Kong which have submitted licence applications to the SFC on or before 29 February 2024,” the SFC clarified.

The regulator also disclosed that Virtual Asset Service Providers (VATPs) failing to submit their license applications by Feb. 29 will be obliged to cease operations by May 31. On the other hand, the SFC urged crypto users using VATPs which are not featured on either list to close accounts or consider transferring their funds to licenced VATPs.

Concerning the license submissions by entities on the virtual asset trading platform applicants list, the SFC said such VATPs’ respective applications are still being processed hence “trading on these platforms [still] carries a risk.” The regulator concluded its statement by urging users to avoid trading on unapproved VATPs because they offer zero protection.

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