HashKey CEO Livio Weng has criticized recent regulations in Hong Kong surrounding crypto trading, expressing concerns that they may impede access for international clients. The regulatory framework requires all crypto exchanges operating in the city to submit applications for regulatory approval by February, with 24 companies, including major players like Bybit, OKX, and Crypto.com, applying for licenses. Exchanges that did not apply are required to discontinue services by May. Weng stated that HashKey’s decision to launch a Bermuda-licensed exchange was due in part to concerns that Hong Kong’s regulations could restrict access for international investors, creating barriers for global users looking to participate in the market.
HashKey currently holds one of only two licenses granted for digital asset exchanges in Hong Kong, the other being OSL, which recently sold nearly 30% of its stake to BGX, an unlicensed cryptocurrency group with ties to China. These developments have raised questions about the sustainability of operating under Hong Kong’s regulatory framework for crypto exchanges, despite interest from new companies wanting to enter the market. The presence of ties to China within the industry has further fueled concerns over the long-term viability of crypto trading in Hong Kong.
The current regulations in Hong Kong impose strict requirements on exchange clientele, including passing KYC checks and having funds in a local bank account or select approved overseas jurisdictions. Weng argues that these rules need to be revised to allow a broader range of international investors to participate in the market, as without modifications, the market may only be able to sustain as few as four licensed exchanges out of the initial 24 applicants. The stringent requirements may limit the market’s attractiveness to global investors and hinder its growth potential.
Weng cautioned that issuing too many licenses could be detrimental to Hong Kong, given the limited size of its domestic market. He believes that a lack of revisions to the current regulations will hinder the market’s ability to attract international investors and may lead to restrictions on access for global users. The restrictions on clientele and the required funds in specific bank accounts may pose significant barriers for international investors looking to enter the Hong Kong market, potentially limiting the market’s growth and development.
The concerns raised by Weng and others in the industry highlight the challenges faced by crypto exchanges operating in Hong Kong under the current regulatory framework. The presence of ties to China within the industry has added an additional layer of complexity and uncertainty to the market, leading to questions about its long-term sustainability. As new companies seek to enter the market and comply with regulations, the need for revisions to allow a broader range of investors and reduce barriers to entry becomes increasingly apparent, in order to ensure the continued growth and success of the crypto trading industry in Hong Kong.
