Web3 firms in Hong Kong are reportedly spending substantial amounts, ranging from 20 million to 200 million Hong Kong dollars ($2.55 million to $25.5 million), to obtain Virtual Asset Licensing Regime (VASP) licenses. This level of investment highlights the industry’s commitment to operating within a compliant and regulated environment.
According to a Foresight News report, leading exchanges such as OKX, BitgetX, HashKey Pro, OSL, and Gate.io have already commenced operations in Hong Kong, with OKX reporting 8,800 registered users and a cumulative trading volume of $150 million in the Special Administrative Region (SAR) of China.
On the other hand, a surge in licensing costs could deter smaller firms from entering the market, potentially stifling innovation in the blockchain and cryptocurrency sectors and limiting competition. It has been noted that the cost of obtaining a VASP license remains high, even for experienced cryptocurrency institutions.
As of June 1, Hong Kong introduced new VASP licensing requirements for cryptocurrency exchanges. Firms must adhere to proper disclosures regarding user statistics and company financials to gain regulatory approval from the Securities and Futures Commission of Hong Kong. Non-compliant exchanges risk being forced to cease operations in the SAR by mid-next year.
In a positive move, the Hong Kong Virtual Asset Consortium (HKVAC) has launched its virtual asset index, comprised of major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), alongside altcoins and privacy tokens. The HKVAC, which counts crypto platforms like Huobi, Kucoin, and Bitget among its supporters, aims to provide ratings services and indices to facilitate retail crypto trading in the SAR.
The licensing procedure indicates an ongoing shift towards greater regulatory oversight and compliance in the cryptocurrency and blockchain industries. While the licensing costs may hamper entry for smaller players, the presence of larger, established exchanges demonstrates a desire to operate in a transparent and regulated environment. As regulations shift and develop, only time will tell whether these costs will create a barrier for broader adoption and market diversity.
Source: Cointelegraph
