Hong Kong's Crypto Exchanges Maintain Year-Long Grace Period Despite Rising Scandals
Summary:
Despite recent scandals, cryptocurrency exchanges in Hong Kong will continue to enjoy a one-year grace period, according to Deputy Secretary for Financial Services & Treasury, Julia Leung. New rules require exchanges to acquire a Virtual Asset Service Provider (VASP) license by June 2024, though unlicensed exchanges can operate until then. The announcement follows a series of crypto scams involving unregistered exchanges such as JPEX and Hounax, which together defrauded locals of approximately 1.72 billion Hong Kong dollars. Meanwhile, Binance-associated HKVAEX is seeking a license, and OSL's parent company, BC Technology Group, secured a $90M investment from BGX.
Cryptocurrency exchanges in Hong Kong retain their year-long leniency despite a spate of scandals, as confirmed by regional news outlets on November 27. Hong Kong's Deputy Secretary for Financial Services & Treasury, Julia Leung, expressed that fraud would persist irrespective of whether the grace period ceased, implying no immediate plans to amend it. New guidelines introduced in June require Hong Kong-operated crypto exchanges to secure a Virtual Asset Service Provider (VASP) license from the city's Securities and Futures Commission before the end of June 2024, risking deregistration otherwise. Unlicensed platforms are permitted to run during this interim phase.
There's been a wave of crypto scandals stirring concern in this special administrative region recently. In September, an unregistered crypto exchange in Hong Kong, JPEX, crumbled following Ponzi scheme claims which resulted in 66 individuals being taken into custody and approximately 1.6 billion Hong Kong dollars ($205 million) in losses.
On November 25, Hounax, another unregistered crypto exchange active in the city, reportedly defrauded 131 locals of 120 million Hong Kong dollars ($15.4 million) by running a similar scam. According to Chan Waikei, a superintendent of the Commercial Crime Bureau of Hong Kong Police, fraudsters masquerading as investment consultants wooed customers with attractive yield promises and later failed to allow them access to their money.
A news article from Cointelegraph on November 27 divulged HKVAEX exchange's attempt to obtain a local operating license, an entity closely associated with Binance. BC Technology Group, the parent company of Hong Kong-bases crypto exchange OSL, gained a $90M investment in the early part of this month from blockchain company BGX.
Published At
11/27/2023 3:42:23 PM
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