As the Hong Kong regulators started floating the VASP licenses earlier this month, Web3 firms have been spending a bomb in securing these licenses.
Hong Kong regulators have been making every push to attract crypto firms from across the world as they seek to become the crypto hub of Asia. The latest report from Foresight News show that Hong Kong-based Web3 firms are spending as high as $25 million in order to secure a Virtual Asset Service Provider (VASP) license.
Starting this month June 1, Hong Kong unveiled the new VASP licensing requirements for crypto firms. To obtain regulatory approval, the firms are required to provide accurate information about user statistics and company finances to the Securities and Futures Commission of Hong Kong. Failure to comply with these requirements will result in exchanges being compelled to halt their operations in the region by the middle of next year.
According to analysts at Foresight, the Hong Kong branches of exchanges like OKX, BitgetX, HashKey Pro, OSL, and Gate.io have already started operating. As of June 27, OKX has gained 8,800 registered users in Hong Kong and has conducted a total trading volume of $150 million in the region. sources familiar with the matter told Foresight News:
“Since traditional financial institutions have no relevant prior infrastructure, and have gone from zero to one in various aspects such as products and teams, the cost [associated with VASPs] has been very high. However, even for an experienced cryptocurrency institution, the cost of obtaining a license is not cheap.”
Recent Developments in Hong Kong’s Crypto Landscape
Amid the recent developments, Hong Kong regulators have been working along with banks while pushing them to serve crypto clients. As per reports earlier this month, the Hong Kong regulators forced banking giants like HSBC and Standard Chartered to serve cryptocurrency clients.
Earlier this week, HSBC announced that it will start allowing its customers to trade Bitcoin and Ethereum ETFs listed on the Hong Kong stock exchange. At present, the Hong Kong Exchanges and Clearing Limited (HKEX) has made available three cryptocurrency exchange-traded funds (ETFs) for trading. These ETFs are the CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF.
Investors can enjoy several benefits from the inclusion of crypto ETFs on the Hong Kong exchange. Firstly, these listings offer a regulated environment that prioritizes investor protection, which adds credibility to the crypto market. Moreover, ETFs provide a convenient and accessible investment option as they can be bought and sold on the exchange similar to traditional stocks, providing liquidity and ease of use for investors.
On that day, the Hong Kong Virtual Asset Consortium released a virtual asset index that includes popular cryptocurrencies like Bitcoin and Ether, as well as other altcoins and privacy tokens. This newly established organization aims to offer ratings services and indexes to make retail crypto trading in the SAR (Special Administrative Region) easier. It has gained support from companies such as Huobi, KuCoin, Bitget, and others.