Wu Wenqian, a practicing lawyer of the High Court of the Hong Kong Special Administrative Region, clarified the huge obstacles faced by virtual asset trading platforms in applying for licenses in Hong Kong.
Wu said there are three main requirements for obtaining a license in the region, with recruiting compliance executives being the most challenging aspect.
In order to obtain a virtual asset trading license in Hong Kong, the platform must meet the following conditions. First, they must have a minimum subscribed capital of not less than HK$5 million and maintain liquid assets sufficient to cover operating expenses for at least 12 months.
Second, the platform must appoint two Local Officers (ROs) who will serve as executive directors of the virtual asset service provider (VASP). The two ROs must have at least three years of experience in the virtual asset industry, and all other senior executives must also undergo a background check conducted by Hong Kong’s Securities and Futures Commission.
Finally, the platform needs to undergo external assessments, including governance and personnel arrangements, listing procedures, anti-money laundering protocols, market surveillance, etc.
Wu Wenqian emphasized that the biggest challenge lies in recruiting executives who meet Hong Kong’s regulatory requirements. The region attaches great importance to the compliance standards of virtual asset exchanges, with particular emphasis on the need for responsible personnel with at least three years of industry experience, preferably from compliant exchanges.
Strict regulations and stringent review procedures demonstrate Hong Kong’s commitment to ensuring the integrity and compliance of virtual asset trading platforms.
By setting high standards for capital requirements, executive qualifications and external assessments, Hong Kong aims to foster a safe and transparent virtual asset trading environment.
Industry experts believe that strict regulation by Hong Kong’s Securities and Futures Commission is crucial to protecting investors and combating money laundering.
Some critics, however, argue that strict requirements could discourage smaller platforms or start-ups from entering the market, potentially hindering innovation and stifling competition.
Despite the challenges, virtual asset trading platforms successfully licensed in Hong Kong will benefit from greater credibility and increased investor trust.
Hong Kong’s status as an international financial center and its robust regulatory framework make it an attractive destination for virtual asset trading firms seeking a foothold in Asia.
As the virtual asset industry continues to evolve, it remains critical for platforms to adapt and comply with regulatory measures. The recruitment of competent and experienced executives, as well as full compliance with regulatory guidelines, will play a key role in shaping the future of virtual asset trading in Hong Kong.