Amid recent scandals in the cryptocurrency sector, cryptocurrency exchanges operating in Hong Kong will be granted a one-year grace period, as stated by Leung Fengyi, chief executive of the Hong Kong Securities and Futures Commission. Leung emphasized that despite the grace period's termination, fraudulent activities might persist, leading to the decision not to amend the grace period or enact temporary measures against fraud.
Starting from June, new regulations mandated that cryptocurrency exchanges in Hong Kong must seek a virtual asset service provider (VASP) license from the Hong Kong Securities and Futures Commission by June 2024; otherwise, they risk their operations being terminated. Throughout this transition phase, unregistered exchanges are allowed to function within the city.
The Special Administrative Region has witnessed multiple cryptocurrency-related scandals lately. In September, JPEX, a Hong Kong-based cryptocurrency exchange operating without a license, collapsed amid allegations of running a Ponzi scheme, leading to the arrest of 66 individuals and losses amounting to approximately HK$1.6 billion ($205 million). Another unlicensed exchange, Hounax, was reported on November 25 for allegedly defrauding 131 residents of HK$120 million ($15.4 million) in a separate Ponzi scheme. Sergeant Chan Wai-kee from the Hong Kong Police's Commercial Crime Investigation Bureau explained that scammers posed as investment experts and enticed users with high returns. However, users were unable to withdraw their funds when attempting to do so later.
As of November 27 the HKVAEX exchange, affiliated with Binance, was in the process of applying for a license in Hong Kong. Earlier in the same month, BC Technology Group, the parent company of OSL, a cryptocurrency exchange in Hong Kong, received a $90 million investment from BGX, a blockchain firm.
