The Hong Kong government's financial services department has underscored the deadline for applications from unlicensed virtual asset service providers (VASPs) as February 29. In an official blog post, Hong Kong Secretary for Financial Services and the Treasury Hui Ching-yu noted that unapproved VASPs must cease operations by May 31. Some VASPs were operating in Hong Kong before the Securities and Futures Commission (SFC) established the licensing system, allowing them a transition period to apply for licenses. Hui emphasized that those wishing to continue operations in Hong Kong must submit license applications before February 29 this year.
The Securities and Futures Commission outlined that existing service providers failing to meet the relevant requirements would receive a "non-deemed notice," requiring them to cease operations by May 31 or within three months of receiving the notice. Any service providers not submitting applications by February 29 are expected to cease operations by May 31. As the deadline for license applications approaches, the Securities and Futures Commission is gearing up for enforcement, including issuing notices to unqualified service providers and increasing publicity efforts, according to Mr. Xu, the official in charge.
Secretary Hui also cautioned investors about the volatility and value of virtual assets, stating that many digital assets lack intrinsic value, and their prices exhibit high volatility. He urged investors to thoroughly understand the details and assess the associated risks before making relevant investments. Hui emphasized that for virtual asset transactions, only platforms officially licensed by the China Securities Regulatory Commission should be used. Additionally, Hui warned that unlicensed operators and service providers may not comply with regulatory requirements and could potentially be involved in fraudulent practices.
Regulators are also considering the regulation of over-the-counter (OTC) venues, according to the official. The move is in response to specific roles played by OTC venues in some fraud cases involving trading platforms in 2023. A proposed regulatory framework for OTC venues will undergo consultation in the near future.
