The last day to register a cryptocurrency exchange in Hong Kon

By February 29, cryptocurrency exchanges that want to operate in Hong Kong must apply for a license under the Securities and Futures Commission’s virtual asset trading platform system.

As of the deadline, 22 cryptocurrency exchanges—including the Binance-affiliated HKVAX, OKX, Bybit, Huobi HK, and Gate.HK—had pending VATP applications with the SFC.

The agency notes in an update on its website that “all VATP applicants on this list are NOT licensed or regulated by the SFC, and may NOT comply with the SFC’s requirements.” “This list’s objective is to make it possible for the general public to determine whether virtual asset trading platforms have falsely or deceptively represented the status of their license application with the SFC.”

Exchanges that haven’t submitted a VATP application have until May 31 to withdraw from the Hong Kong market. As of June 2023, when the city opened up for retail cryptocurrency trading, four exchanges have had their applications canceled or returned. Exchanges whose VATP applications are denied by the SFC are also required to vacate the city within three months. OSL and HashKey are currently the only exchanges in Hong Kong that have received SFC approval.

In 2023, Cointelegraph revealed that Web3 companies are investing up to $25 million in the infrastructure and regulatory adherence required to obtain a VATP license in Hong Kong. Exchange applicants are also needed to provide at least 50% insurance coverage for their customers’ assets and submit to periodic audits of their financial statements in addition to the separation of funds criteria.

Even with the regulatory mandate, unlicensed exchanges continue to pose a challenge in Hong Kong. Two of the biggest cryptocurrency exchanges in Hong Kong, JPEX and Hounax, failed in 2023 as a result of claims that they were running Ponzi schemes. While 145 victims of the Hounax fraud lost a total of $18.9 million, an estimated $180 million of investor money was stolen in the JPEX incident. The majority of investors’ money is still gone, even though authorities have blocked some of the funds connected to JPEX and Hounax.

Another cryptocurrency exchange based in Hong Kong, BitForex, faced criticism on February 26 after suspending redemptions by users and taking $56 million out of their hot wallets the day before. Additionally, the exchange is no longer answering questions from users, and an investigation is still underway.

APAC exchanges are still growing.

Asia-Pacific-based cryptocurrency exchanges are still working to grow during the current bull market.

The cryptocurrency exchange OKX declared on February 27 that it had opened OKX Turkey, providing Turkish users with direct bank deposits and withdrawals as well as a fiat on-ramp onboarding to the Turkish lira.

The exchange released a statement saying, “We are thrilled to offer Turkish users a strong platform to trade major cryptocurrency pairs, including USTD/TRY, BTC/TRY, and ETH/TRY, and provide users with advanced crypto features.” Hong Fang, president of OKX, continued, “With a crypto adoption rate close to 50%, Türkiye represents a very dynamic and promising market for the industry as it continues to develop.”

In Q4 2023, Bitget, a cryptocurrency exchange, claimed a 540% rise in trading volume among its Southeast Asian consumers.

The exchange stated that “total trading volume exceeding US$3.14 trillion in 2023.” “Notably, despite market volatility, spot trading volume increased to US$81.6 billion, representing an impressive 94% increase.” The exchange established a $100 million Web3 fund in September 2023 intending to advance Asian-based initiatives and protocols.

According to its VATP filing on February 26, cryptocurrency exchange HTX (previously Huobi Global) is back in operation following a turbulent year, and it plans to expand to Hong Kong.

The largest DeFi platform in the Tron ecosystem, Sun.io, had stated the day before that it would be strategically partnering with the HTX DAO to increase the total value of its locked-for-liquidity by $100 million.

With a minimum of 80% allotted to SUN.io, the platform stated that “HTX DAO is estimated to contribute 50% of its quarterly liquidity donations received to the HTX-TRX Liquidity Pool (LP) through this partnership.”

$383 million is set aside by Hong Kong for Cyberport

With a strong emphasis on artificial intelligence, Hong Kong authorities will devote 3 billion Hong Kong dollars ($383 million) to its Cyberport business park program over the next three years.

In a budget statement on February 29, officials said, “Cyberport is expediting the establishment of an AI Supercomputing Centre to meet the demand of research institutes and the industry for computing power.”

The supercomputing facility’s processing capacity is anticipated to reach 3,000 petaFLOPS by early 2026 at the latest. This kind of power is comparable to the ability to process almost 10 billion photos in a single hour.

Cyberport is a government-sponsored project in Hong Kong that was introduced in 2023 to lure Web3 and AI companies to the city and help the city’s small and medium-sized enterprises adopt digital solutions. Soon after its inception, the program drew in over 150 businesses to migrate to the city.

This year, the Digital Yuan Multichain Bridge will debut.

In 2023, the Central Bank of China will introduce a new multichain bridge into its digital currency, the digital yuan.

In cross-border trading between China, Hong Kong, and other nations, the technology, called mBridge, will enable the digital yuan to be exchanged for other CBDCs, according to local news sources on February 28. Furthermore, Hong Kong’s financial secretary, Paul Chan Mo-Po, stated that citizens would have more opportunities to utilize China’s digital yuan wallets for activities like shopping and domestic travel expenses.

China and the United Arab Emirates came to a $400 million agreement in December 2023 to permit the exchange of each nation’s CBDC during bilateral commerce. Chinese President Xi Jinping explicitly mentioned the necessity of expanding local currency settlements for reciprocal trade in July 2023, saying:

“The Chinese side proposes to expand sovereign digital currency cooperation, support the establishment of SCO development banks, and increase the share of local currency settlements of SCO [Shanghai Cooperation Organisation] countries.”

Conclusion

Asia’s cryptocurrency landscape is a narrative of exponential growth, innovation, and transformation. Hong Kong, with its unique position as a financial powerhouse, has become a veritable hub for digital asset activity. The surge of exchanges across the APAC region is a testament to the region’s appetite for cryptocurrency and its capacity to shape the global market.

China’s pioneering efforts with DCEP underscore the region’s continued importance and influence in the global economy. The interplay of these dynamic elements presents an exciting, if challenging, landscape for investors and market analysts alike. Cryptocurrency’s future is intrinsically linked with the advancements happening on the Asia Express.