Binance and Coinbase absent in Hong kong VASPs list!

Introduction

Crypto regulation continues to be a burning issue in the space as different governments try to regulate the sector. Hong Kong is one of the countries that are seeking to welcome crypto companies, but they must accept to pass through regulatory procedures by the government. But in their current regulatory structure under which Virtual Asset Service Providers (VASPs) where asked to apply, two big names are absent- Binance and Coinbase.

Crypto enthusiasts that are interested in what is happening in Asia are left wondering what the absence of these two big names mean for the crypto community in Hong Kong. We will get to that a little later. But before then, here was what the space looked like before.

Hong Kong and crypto regulations

The crypto space in Hong Kong has not been so tight prior to June 2023. Some operators are offering digital assets services to various users in the country. But after some incidents that resulted in investors loosing a lot of money in crypto assets, the government stepped in and started offering some regulatory structures from June 1, 2023. As a result, many operators have not found it easy to offer digital assets services freely.

Coming into 2024, the government have stepped up its effort to hold a more tighter control over platforms or organizations that offer crypto services. This was as a result of more calls for crypto regulation across the globe, plus increasing incidents of scam involving some service providers. Hence, Hong Kong now requires crypto and other digital assets service providers to pass through a rigorous regulatory process and accept to continue being monitored even after they have been licensed to operate.

The government set out a deadline date by which time every crypto platform must submit their application to receive their operating license in the country. The deadline was 29th February 2024. All the interested parties are supposed to have submitted an official application before that date.

Interestingly, many crypto platforms and companies sent in their applications. The deadline date has come and gone. The Hong Kong government also advised crypto companies that are already existing but do not wish to apply for regulation to wind down and discontinue their services. Since this would not be an easy process, they have been given time to effective cease all their business activities in the country. The deadline date for them is 31st May, 2024.

Binance and Coinbase did not apply

While many known crypto companies have submitted their application, two of the biggest platforms did not apply - Binance and Coinbase. It simply means that these two will cease their operations in Hong Kong after 31st May, 2024.

These two companies and any other ones that did not apply would officially receive a service notice by the Securities and Futures Commission (SFC) in Hong Kong. This notice will remind them that they have until may to cease operating in the country. While proponents of no regulation would see this as a bad move, the Hong Kong government is intent in protecting investors and their assets from the volatility of digital assets and from scam projects.

A total of 24 crypto companies have applied for the operating license and regulation from the SFC. Some of the companies that have applied includes Bybit and OKX. After the vetting process and other procedures, companies that qualify to do so would be allowed to start offering crypto services to users in Hong kong.

The absence of Binance and Coinbase in the applicants list could raise concerns over Hong kongs drive to becomes a leading hub in the crypto space in Asia. These two platforms are giants in the crypto industry and hold a very large number of users and transactions. Their ommision will likely have an impact in the speed of growth of crypto adoption in that country. However, if many of the 24 applicants already received passes through and obtains the license, then the absense of Binance and Coinbase might not be greatly felt. Besides, it might represent an opportunity to grow their user base for the companies that eventually made it after the scrutiny.

Finally

Crypto regulation continues to be a huge topic in the crypto space. While many countries allow crypto platforms to exist and do business without much interference from regulatory agencies, some countries like the US have taken firm stand against unregulated trading of digital assets.

Asia is growing in strength and userbase when it comes to digital assets trading. Hong Kong is working hard to become a hotspot for crypto activities. This remains to be seen though with this new regulatory move by the country. We will keep an eye on this as the situation develops.