The Securities and Futures Commission (SFC) granted licences to four virtual asset trading platform (VATP) applicants under its swift licensing process for handling deemed-to-be-licensed VATP applicants (deemed applicants) (Note 1). This came after the SFC completed risk-based on-site inspections on all deemed applicants following the introduction of its inspection programme in June this year (Note 2).

As a licensing condition, they can operate on a restricted scope of business after completing their rectification actions in response to the SFC's on-site inspection feedback (Note 3). They are also required to perform a vulnerability assessment and a penetration test through an independent third party with satisfactory results.

“We have been proactively engaging with VATPs' senior management and ultimate controllers which helps drive home our expected regulatory standards and expedite our licensing process for VATPs,” said Dr Eric Yip, the SFC's Executive Director of Intermediaries. “We aim to strike a balance between safeguarding the interests of investors and facilitating continuous development for the virtual asset ecosystem in Hong Kong.”

In the light of the effectiveness of directly engaging with the senior management and ultimate controllers of VATPs, the SFC will extend this approach when the VATPs engage an external assessor to conduct their second-phase assessment.

Specifically, the SFC will supervise the whole second-phase assessment process through a tripartite engagement together with the VATPs and their external assessors, and will uplift the restriction on business scope after the second-phase assessment is completed to the SFC's satisfaction.

In this connection, the SFC published a circular today to set out a clear roadmap for VATPs on the licensing process and provide more guidance on the second-phase assessment (Note 4).

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Notes:

1.These four VATP applicants are Accumulus GBA Technology (Hongkong) Co., Limited, DFX Labs Company Limited, Hong Kong Digital Asset EX Limited, and Thousand Whales Technology (BVI) Limited. The remaining applications are being considered under the same swift licensing process.

2.Please refer to the SFC press release dated 12 June 2024.

3.The SFC will consolidate the inspection findings and provide additional guidance in early 2025.

4.The SFC will provide additional guidance on the licensing process of new corporations applying for a licence to operate a VATP in early 2025.